§ Finally, in respect of Income Tax, I propose to deal with the difficult problem of double Income Tax within the Empire. War conditions here and in the Dominions and War taxation produced such a measure of hardship that temporary relief was afforded by a section of the Finance Act of 1916, which, although admittedly only of a stop-gap character, did afford at the expense of the United Kingdom Exchequer considerable relief from the double burden. At the same time promise was made by my predecessor, or by the Government as a whole, that as soon as possible after the War the whole question should be investigated. This investigation naturally formed part of the work entrusted to the Royal Commission, and I am happy to say that they have been able to find a solution of this troublesome problem. The Commission have unanimously approved the recommendation made to them by a Sub-Committee, and 95 I propose to adopt it. The Report of the Sub-Committee is included as an Appendix in the printed Report of the Commission. It shows that Australia, Canada, India, Newfoundland, New Zealand and South. Africa sent representatives to the conferences, who, with one exception, were prepared to recommend the solution to their respective Governments.
Shortly, the proposal provides that when within the Empire the same income is taxed twice, usually because it is enjoyed in some part of the Empire other than that in which it arises, the lower Income Tax should be eliminated by the countries concerned respectively remitting proportions of their tax equal in the aggregate to the whole of the lower tax. Between the United Kingdom and the Dominions it is proposed that relief should be afforded by the reduction of the rate of the United Kingdom Income Tax, including Super-tax, to one-half of the rate of tax charged upon the taxable income, and that the balance of relief, if any, should be given by the Dominion concerned. Thus in the case of a taxpayer charged in the United Kingdom at the rate of 5s. on income which is also taxed in the Dominion at the rate of 3s., the relief from the United Kingdom Income Tax will be at the rate of 2s. 6d., that is, one-half of 5s., and the balance of relief, namely, 6d., necessary to eliminate altogether the lesser of the two charges, will, under the terms of the proposal, be afforded by the Dominion in question. The Commission's Report shows in great detail, by several examples, the actual working of the scheme. I confidently hope that the Dominions will adopt the proposal and make relief complete by similar action on their part. In any case, I propose to put the alteration into operation forthwith. Where the Dominion rate of tax does not exceed one-half of the United Kingdom rate, the relief will, for reasons explained, be complete. The present relief costs the Exchequer £2,000,000 a year. The additional charge to the Exchequer involved in the more extensive relief now proposed will be be another £2,000,000 in a full year, making £4,000,000 in all. For the current year the total cost of reliefs will be £2,500,000.
§ Mr. C. PALMER rose
96§ The CHAIRMAN (Mr. Whitley)Will the hon. Member put later any questions he has to ask? It is very unusual and very undesirable, in the case of the Chancellor of the Exchequer's first statement, to interrupt him.