§ Section thirty-five of the Finance Act, 1894, shall be read as if in Sub-sections (a) and (b) thereof, in lieu of tin; words "one-eighth" and "one-sixth," were respectively inserted the words "one-sixth" and "one-fourth." —[Mr. Cautley.]
§ Brought up, and read the first time.
§ Mr. CAUTLEYI beg to move,
That the Clause be read a second time.This Clause, if passed, would have the effect of giving what I venture to think is well-deserved relief to the taxpayer under Schedule A. As the Committee will be aware, in the assessment for Property Tax under Schedule A certain, statutory deductions are allowed, namely, in the case of Land, including houses, one-eighth of the annual value, and in the case of houses, shops, and all that sort of property, one-sixth of the annual value. Those deductions were fixed by Section 35 of the Finance Act, 1894. That was a rough and ready way of arriving at the assessment under Schedule A. It never purported to be exact. When the Income Tax was only a small amount in the£, the grievances 471 suffered by the taxpayer were not very large, and as a working rule it was not a bad one. I object on principle to the rule itself, but I am not here asking that the rule should be altered. My own view is that the property-owner should be dealt with in exactly the same way for Income Tax purposes as the owner of a business, and should really be assessed under Schedule D—that is to say, he should be taxed on the net income he derives from the property. That would have the effect of encouraging landowners and property-owners to keep up their property, and, further, they would not be unduly and unfairly taxed, as they are under the present system. The better the landlord, and the more he spends on his property, the harder is the tax-gatherer on him; whereas, the worse the landlord and the less he spends on his property, the less does he suffer at the tax-gatherer's hands. [have not, however, sought to alter the basis on which Schedule A is collected, though I would urge the hon. Gentleman in charge of this Bill to consider whether he could not put this question before the Commission that is now sitting. The State and the public would very much gain if the system were altered.Assuming, however, as I do, that this rough and ready method is to continue, it is obvious that what in 1894 was a fair amount to allow for repairs must be hopelessly and entirely wrong now. Everybody will agree that the cost of all building operations, of all repairs to property, has increased since that time by at least 100 per cent. I say that it has increased by 150 per cent.; that is to say—and I think every Member of the House who is acquainted with any operations connected with building will bear me out—that the cost of all building operations to-day is two-and-a-half times what it was in 1894. If that is so, the suggestion contained in my Clause is too modest, because a reasonably good landlord would spend, and indeed, any landlord would really have to spend, that sum on maintaining his property in a condition to enable him to receive the annual rental value. If that is so, the deduction ought to be multiplied two-and-a-half times, which would make the figures five-twelfths and five-sixteenths respectively, whereas I am only asking that they shall be reduced to one-fourth and one-sixth. That would give some relief to the taxpayer. It would cause the tax to be paid with greater alacrity, 472 there would be less desire to shirk or to cheat the Government, and there would not be that feeling prevalent, which is so detrimental to the collection of the tax, that the taxpayer under Schedule A is being unfairly dealt with. I am very loth, whenever I address the House, to put for ward my own experience, but in this particular case I think it is rather to the point. Shortly after I left the university I decided to build some workmen's houses that would be, not of a model kind, but a little in advance of the standard then prevailing. I built them, and I think I may say, without boasting, that they have been fairly well maintained; at any rate, I have not had a house empty. They are in a very large city; but I tell the Committee that, from the time those houses were built until now, I have been robbed every year by the tax-collector. Those houses were built with the intention of securing a 5 per cent. return for the money, and no more. They have been administered and looked after on proper business lines, but the result has been that, taking them all together—there are fifty of them—there has not been one year in which I have not paid more Income Tax than the income I received from them. That is, I venture to say, in itself a condemnation of the present system. The advantage to the State and the public would be that there would be more inducement to the owners, both of small and large property, because they are all on the same footing, to keep their property up to the mark and to spend money in annual repairs, and the tenant would gain enormously.
The proposition that I am making is by no means new. Those who have taken an interest in these matters of taxation will be aware that this question was dealt with so far as it affects very small houses, and there was a provision under which the owner of a very small house can get back what he spends, over an average of five years, over and above the figures of one-eighth and one-sixth. That is all very well so far as it affects large estates, where you have a skilled agent who can keep the account necessary, and where a return spread over the whole period can be made and sent in to the taxing authorities. But in Yorkshire particularly, where a large bulk of the small property is held in small lots, that is quite illusory, and it is quite useless to the property owners. They do not get 473 back this return, but are compelled, as in my own case, to pay the annual amount of the tax—that is to say, an amount which is greater than they ever received. I do ask the Financial Secretary to give consideration to this act of justice which I am asking for a large class. We are now particularly interested in the erection of houses for working people. I would point out to the Chancellor of the Exchequer that the concession that was given under the Acts of 1910 and 1914 is limited to houses of£12 a year only in rateable value. That is quite useless now, because there is no house in the future, practically speaking, that will not be worth more than 12 a year. I do not think that this small concession which I am asking would cost a large sum of money, while there would be a great gain, in that the feeling of injustice on the part of the owners of this class of property would be removed, and there would also be a gain because more money would be likely to be put into the repairs of the property.
Mr. CHAMBERLAINI am sorry that I did not hear a great deal of my hon. Friend's speech. I regret I cannot accept his Clause, but I am ready to try and meet him to some extent between now and the Report stage. What I think I can do will be to put down something—I will put it on paper for the hon. Gentleman to see—to the effect that the houses to which Rule 8 of No. V. of Schedule A refers shall be any houses the value of which as adopted under Schedule A does not exceed the limits of the Rent Restriction Act—that is to say, to, work it out on the higher figure on an average of years.
§ Mr. CAUTLEYI am much obliged to the Chancellor of the Exchequer for what he has said, but the objection to what, as I understand, he wishes to propose is the difficulty of providing the machinery to get the Income Tax returned. It he could see his way to allow the reduction to be made from houses up to a certain class I would welcome that. The small property owners have not the machinery nor the ability to get back the money by that means of which large estates can avail themselves.
Mr. CHAMBERLAINI want to do something if I can to meet the hard cases put forward by my hon. Friend, provided that the repairs are executed, and where the matter is not sufficiently provided for by the present law. They would have to put by for repairs, circumstances of 474 labour, and so forth, so as to make these repairs possible. I am sure the hon. Gentleman does not want me to give relief in. respect of repairs which are merely to be treated as additional income by the recipient, and not used for the purpose for which it is given.
§ Mr. CAUTLEYIf the right hon. Gentleman had heard what I had to say he would have found that I had argued on that line. So far as I am concerned I leave the matter in the hands of the Chancellor of the Exchequer to do what he can, and so far as he can, on Report to meet these cases.
§ Motion and Clause, by leave, withdrawn.
§ The CHAIRMANThe new Clause on the Paper in the name of the lion. Member for Finchley (Major Newman) [Deduction of Income Tax from. Weekly Wage Earners] involves a charge upon the employer, and I am afraid is, therefore, out of order.
§ The CHAIRMANThe hon. Member suggests that the taxes of the weekly wage earner should be paid by the employer. He then goes on to say that the employers, under certain conditions, may take it from the wages. But the man may disappear, and his employer would be liable to the tax. Under these circumstances, I think it involves a, charge.