§ Notwithstanding anything contained in Section thirty-six of the Finance Act. 1916. or any enactment relating to Super-tax, there shall be allowed in the assessment for the purpose of such tax and in respect of payments made for life insurance premiums such sum not exceeding one hundred pounds as may appear to have been paid by or upon the life of the person liable to such assessment. —[Sir H. Neld.]
§ Brought up, and read the first time.
§ Sir H. NIELD
I beg to move,That the Clause be read a second time.This Clause deals with a small point, and I hope the right hon. Gentleman will remedy what is at present an injustice. Super-tax is in the nature of additional Income Tax, and is governed by Income Tax law. Under the Act, which permitted allowances in respect of premiums upon life insurance, many men effected very large insurances, and were able to deduct very large premiums from their annual income. Gradually the provision was restricted until you could not for Income Tax purposes deduct more than one-sixth of your total income. Super-tax was put on in the Budget of 1909–10. It was then levied only on incomes of £5,000 and upwards, and so. it remained until the Finance Act of 1916, when, under stress of war, the exemption from Super-tax was reduced, until it stands at half the original exemption—namely, £2,500. All incomes of£2,500 and over are called on to bear not only 6s. in the£Income Tax, but Super-tax appropriate to the amount, and while for the purposes of Income Tax 537 you can still deduct premiums on insurance to the extent of one-sixth of your income, for some reason it was thought desirable in 1916 to abolish all relief in respect of premiums on life insurance in relation to Super-tax. This has operated very harshly during the War, when incomes were reduced so enormously by this high Income Tax and the Super-tax, and the increased cost of living. When these taxes are paid you have got to halve the residue to get the pre-war value of the net income. Then the capital now secured by a policy of life insurance comes in for Death Duties. Therefore you are doubly taxing a fund on which you ultimately get Death Duty. It is a matter of considerable importance to deny for the purposes of Super-tax the insurance premium, whatever it be, whether big or little, and you penalise these relatively small incomes, because men who lived before the War at a certain standard, find now, when the Income Tax and Super-tax are levied, considerable difficulty in maintaining the same standard of life, and therefore these payments are of considerable importance, and all these burdens, with local rates advancing and the concessions that have to be made to labour, are piling up a burden of debt which is beyond endurance. I hope, therefore, that the proposed new Clause will be accepted.
The subject raised by my hon. Friend has been raised on several occasions before. It has been the subject of decisions by the House after hearing—
After hearing arguments by my predecessors, my hon. Friend now asks to have these decisions in part reversed. I am sorry that I cannot accept his proposal. The present arrangement is something in the nature of a compromise. Policies of insurance with a rising rate of Income Tax and Super-tax were being used, not as an insurance against death or a contingency of that kind, but to insure against Income Tax and Super-tax. The actual position of the law now is something in the nature of a compromise. I venture to say one word more. I think my hon. Friend has chosen an unfortunate moment for asking for an extension of relief in respect of the provision made for Death Duties. There is an unrivalled means of provision for Death 538 Duties in the VictoryLoan. Insurance-companies have issued statements giving the conditions. I could not possibly consider a further proposal in respect of such matters. It is a very great concession to those to whom such considerations would apply to allow Victory Bonds which are subscribed at £85 to be received for Death Duties at £100.
§ Sir H NIELD
Surely my right hon. Friend is confusing two matters which are absolutely distinct. The question of the provision for Death Duties has nothing to-do with the annual provision that a man must make in his life. I should like my right hon. Friend to be a little more explicit about the compromise. I think he was not occupying the position of the Chancellor of the Exchequer at the time. My recollection does not bear out the statement that there was any definite compromise with regard to life premiums. Until that time all premiums were liable to be deducted up to one-sixth of the income for Income Tax as for Super-tax. Then the Government took it into its head to impose for the first time Super-tax upon payments which had already been made. I cannot accept the answer. My right hon. Friend must forgive me, but I think that by introducing the matter of Victory Bonds and Death Duties he has avoided the point.
§ Question put, and negatived.
§ New Clauses—["Amendment of Section 8 (12) of Finance Act, 1894," and "Exclusion from Computation of Property Passing at Death of Capital Sums Payable under Certain Insurance Policies"]—stood on the Paper in the name of Mr. EVELYN CECIL.
§ The CHAIRMAN
The first Amendment on the Paper, in the name of the right hon. Member for Aston, must be an. Amendment to another Clause. I call upon him, however, to move his second Amendment.
§ Mr. E. CECIL
With regard to the second Amendment, I will content myself to-night with what the Chancellor of the Exchequer has just said and let the matter stand over for the present. I should like, however, to express the hope that he will in future give the proposal contained in the Amendment his very serious consideration. I think it is one for which a very strong case could be made out. I do not propose to move it now.