HC Deb 27 April 1920 vol 128 cc1133-85

Postponed proceeding resumed on Question proposed on consideration of the Ninth Resolution, "That this House doth agree with the Committee in the said Resolution.

Question again proposed.


(continuing): I should like to reply to the two points raised by Members before I deal more generally with what has been said about the proposed motor taxation. As regards agricultural preference which has been mentioned, that, I think, has been so fully replied to by my hon. Friend behind me, that I can really add nothing to what he has said. I do not think that there is any agricultural preference, except in so far as is justifiable in considering the extent to which motor tractors use the road, and considering also the fact that they are very large agents in the important food production of the country. The hon. Member for Govan raised the question of invalid chairs, to which, as I understand it, auxiliary motors are attached. He suggested that they were charged at a higher rate than they should be. The matter is one which I shall be very glad to consider before the Finance Bill comes forward. The hon. Baronet the Member for Twickenham (Sir W. Joynson-Hicks) asked whether it would be possible to alter the weight for motor-cycles from 7 to 8 cwt. This is a matter where we can probably meet the point, but I would not like at the moment to bind myself. Steam rollers was the subject of another question from an hon. Member, but they are not charged at all.

The hon. Baronet raised the point about it having been an instruction to the Committee to abolish the Petrol Tax, and he suggested that it was upon that basis that the Committee were directed to pursue their investigations I was not at the Committee, and certainly no instruction was given by me to the Committee, or heard in this House, but the hon. Baronet's points were very clearly answered by an hon. Member. I think that if the hon. Baronet will consider the wording of the Report, and, still further, if he would review the shorthand notes which have been circulated, I think, to Members of the Committee, he will find that the possibility of taking off the Petrol Tax, far from being ruled out, was very fully considered. I have had the opportunity of consulting the Chairman of the Committee since the hon. Baronet made the point, and he assures me there was no such ruling out of the Petrol Tax at all.


I did not say there was any formal ruling out by the Chairman, but it was distinctly impressed upon the Committee that it was desirable to get rid of this tax.


Well, impressions by various Members of the Committee may differ, but I am sure, as my hon. Friend has been assured, that the matter was very fully considered. I think those were the two points then put to me specifically.

This taxation, unlike any other portion of the Budget, comes forward as a specific effort on the part of the Committee which has argued it, I think, with great ability, and with a great desire to arrive at a solution of the problem. Unlike any other part of the Budget, this is a specific act to assure a specific revenue to be devoted to a specific object. It is to raise, roughly, £8,000,000 a year. For what? From whom? From road-users for the improvement of the roads. I think it is common ground amongst all motorists and all others interested in mechanical traction that we have got to do something for the roads in order to develop mechanical traction in the country. It is not in the interests of a class. There has been a certain amount said in this House abount this being a Report that favours the Rolls-Royce, or the agricultural tractor, and that it favoured or did not favour—I hardly know which—the char-a-banc. But there was no favouritism in it at all. It is a reasonable way of raising a revenue. It is almost common ground. I think that the Chancellor of the Exchequer ought not to be called upon at this stage of the country's finances to improve the roads. This is an endeavour to get money by the fairest way possible from those who use the roads, and who want us to improve the roads. This is not for horse-owners, who do not necessarily want the roads im- proved in this way at all. There was no dispute, I think, about the classification of the roads, or that the concurrent expenditure of bringing them up to a proper state was desirable.

How did this Committee arrive at the basis of taxation? They considered first of all whether the petrol tax should be continued as a proper Measure for road users. Every Member of the House is familiar with the reasons why the Petrol Tax cannot be continued. Hon. Members may disagree as to whether the reasons put forward are strong enough reasons. These are that it is so easy to evade the Petrol Tax, and with the increased price of petrol, and increased taxation on petrol, if we were going to raise this necessary money for the roads by this means the inducement to evade the tax would become greater and greater. If you were to raise this amount of money, the necessity of which has never been disputed by petrol alone, the man who pays 6d. would have to pay 1s. 2¼d., and it is too much to put on an additional tax of that kind. It is a very costly tax. One hon. Member, speaking from behind me said, why impose this costly tax, why do not you go with the Petrol Tax? Well, the rebates alone of the Petrol Tax cost £65,000 to administer—money chucked away, and we have nothing for it! You do not wish to penalise the commercial user, the man who is going to use his motor for his trade and the trade of the country.

The Petrol Tax is not a fair tax at all. By the process suggested by some hon. Members you are simply going to tax the motor vehicle out of the country. This is an attempt to get a tax failing the Petrol Tax, and failing the appearance of, as my hon. Friend says, a workable scheme of tyres. When my hon. Friend gets a workable way of taxing tyres, I shall be very glad to hear of it.


Why not in the re-treading of tyres have a distinctive mark upon them which an officer of the law could see, and in seeing, judge whether or not there had been evasion.


When my hon. Friend has put together a scheme by which he proposes to raise £8,000,000 a year by a tyre tax, a scheme which will be simple to impose and cheap to collect, I will be glad to hear of it. There will be no question of resilience of tyres and it must not be capable of evasion. I shall be glad, then, to hear of it. The Committee considered this matter, and could find no way of taxing tyres. Petrol, for reasons I have given, and which the House knows perfectly well, was found to be a tax, a costly tax, and one which created a great deal of evasion, being very easy to evade. It did not tax the user of the roads by any means at all For that reason there are heaps of buses running which do not pay a penny tax because they do not use taxable fuel. They use benzol.


Tax benzol.


That is one of the difficulties. Again in the matter of petrol it is almost impracticable to divide what the owner of a private motor car uses for his business and what he uses on account of his industry. This sort of thing is going on all over the country. Hon. Members must know many cases. It is impossible to check that sort of evasion. Having disposed, as the Committee thought, after the most exhaustive and earnest inquiry of various possibilities, they were driven to a tax on vehicles. It is a remarkable thing that outside this House—and, of course, this House is a judge of its own proceedings—there is no one who objects to the tax. It is not the commercial users. A letter has already been quoted from "The Times," which says that the Standing Joint Committee of the Mechanical Road Transport Association are entirely in favour of it. It is true that the Royal Automobile Club, one of the great bodies which represents motorists, would have preferred to see a tax imposed more accurately on the road user. As that has been found impossible the Royal Automobile Clubs, represented on the Committee remember, have accepted our proposals. The Commercial Motor Union, and the whole of the motor building trade, have accepted it. The only organisation, I believe, which dissents is the Automobile Association. There is no other dissent from outside.


Does the right hon. Gentleman quite state the position in that respect?


I myself have received no complaints or protests from them, and I understand that they are agreed now. Failing free roads, or failing a Petrol or a Spirit Tax which accurately represents the user of the roads, no alternative can be seen by the Association. A great many of the commercial users as well, as my hon. Friends know, are strongly in favour of it. The traders say that, at any rate, they know where they are. In these circumstances, let us look at what the position is. We are agreed that we have got to get money for the roads, and we have devised what we believe is the best scheme. It is not argued that any of the great motor interests of the country, except the Automobile Association, dissent, and that, I believe, is not true. Anyhow, they have sent no objection to me, and I have seen none of the papers. They were represented as fully as possible on the Committee.

8.0 P.M.

Let us see how the proposed tax affects the private motor user, the man who is the owner of a private car. I have circulated with the White Paper a statement in which I have illustrated this aspect as well as I could illustrate it. It shows that the more a man uses his car the less will the tax hit him. Briefly, the car owner who uses his car only for week-ends, and who keeps it as a luxury and does not use it regularly like the doctor, is the man who is worst hit, and he is not badly hit. If you look at the table you will see that. Further, the doctor and the veterinary surgeon, whose cases have been raised, are rebate users to-day, and there is no reservation in it, and I do not see why there should be any. In the letters which we have got from the two large central selling corporations they say that they are giving 7d. reduction in petrol as soon as the sixpenny tax is off, so that these two very deserving users of motor cars, the veterinary surgeon and the doctor, get an advantage which is not shown in the statement at all. It is claimed by my hon. Friend the Member for Newcastle-under-Lyme that the charabancs will be killed. There I would say that that has not been put forward strongly either by the owners or the builders, but on the other hand the proposed tax does provide for what I believe will be a considerable benefit, namely, the quarterly licence. If the owner of the charabanc wishes to run only in the summer season he can take out a quarterly or a half-yearly licence, and that applies to commercial vehicles. The only exception is motor cycles. That is really the only answer I can give, and which I think the House would wish me to give at this stage. We have to get the money. We have devised what we believe to be the best method. A tax on petrol would never raise the money we require, and it is inconceivable that we should put a tax which used to be 3d. per gallon, which was put up to 6d. during the War, up to 1s. 2¼d. with the price of petrol what it is to-day, because that is unthinkable.

The people who are going to pay this tax are not conplaining. The owner of the commercial vehicle is prepared to pay because he says that the greatest enemy to his trade is bad roads, and the greatest benefit to his trade is good roads. He is prepared to pay because it will mean that his trade will flourish, and that is my answer to all those who have criticised this system of road transport. I am anxious to develop motor traction on the roads, and you can only get that if you have good roads. Now we have got almost complete agreement from all those interested except the Automobile Association, which does not represent the commercial motor user. Personally I hope that this will not be a permanent tax. I hope the day will come when the Exchequer will be able to bear a portion of the burden of the roads, but if we can get this scheme into operation we shall have turned a milestone in motor traction on the roads which will be a landmark for all time in regard to this means of the development of transportation.


I have listened with interest to the speech of the Minister of Transport, and I wish to know whether the question of the position of medical men and veterinary surgeons has been raised to-day?


Not to-day, but it has been mentioned to me by several hon. Members.


I should like to make a strong appeal on behalf of doctors and medical men throughout the country. The Medical Committee of Members of this House met a strong deputation of the Medical Association, and they specially requested us to bring before this House the fact that formerly medical men and veterinary surgeons had a rebate of the tax on their cars. With the increase that is now taking place many medical men in the country districts will be very hardly hit indeed. At the present time many of them are paying only £3 3s. a year, and under the new regulations that will be increased to £20 a year. Therefore I appeal to the right hon. Gentleman to seriously consider the question, both of the medical men and the veterinary surgeons, and extend to them a half-rebate, as has been done in previous Budgets.


May I explain that I was not quite accurate in what I said just now about the quarterly licence? I should have said the only exceptions are motor cycles, tramcars and vehicles, which are taxed at 5s.


I support the principles laid down in this proposal for reasons which have been given at very great length, and I shall not further discuss them. I wish, however, to call the attention of the Minister of Transport to what may seem a small matter, which affects a very large class of tradesmen. It is the case of a tradesman who distributes his goods, such as newspapers, who cannot rely upon one motor vehicle, and he must have a stand-by, especially on bad roads, where his motor vehicle is continually breaking down. A tradesman in my constituency writes to me that he keeps twelve motors to distribute his goods, and he never uses more than eight of them on any one day. The other four are stand-bys. He thinks that he ought not to be taxed on the whole twelve motors, but only upon the eight which really use the roads. Therefore I ask the Minister of Transport between now and the introduction of the Finance Bill to consider whether he cannot take that point into consideration and either reduce the tax on what I may call the stand-by or abolish it altogether in bonâ fide cases. I do not know whether the right hon. Gentleman will agree to answer my question now.


Certainly I will consider it.


I appeal to the Minister of Transport as to whether he could grant some relief in regard to these taxes It is true, as he has stated, that quarterly licences may be taken out, but I believe that there is quite a considerable penalty by the additional increment with reference to these quarterly licences I hope the Minister of Transport may see his way to grant the quarterly licences on the same terms as annual licences, although there is more trouble in connection with the quarterly than the annual licences, but I think this would help to meet the cases which have been alluded to by the hon. Gentleman who has just sat down. It will be the poorer users of the roads who will have to resort to the quarterly licences, and the Minister of Transport might very well consider how to meet their claim in that regard.

I realise that whatever form of general taxation is imposed it is bound to bear unevenly and hardly upon some of those who are affected by it. It so happens that this particular form of taxation hits the user of a certain type of car which is applied to the trade and the poorer section of those who desire to use the roads in this way, and still that is the very type of car which damages the road least of all. It is a light car which has to have engines of very considerable horse-power. The number of that particular type of car on the road would be considerably in excess of all other types at present in use in this country, and there is a tendency for the number to increase. The car is used very largely for commercial work, especially by travellers, and I am wondering if the right hon. Gentleman has considered whether the same amount of revenue could not be raised by modifying the scale so as to allow the users of these cars some advantage either on account of weight or of price. Could not the scale be graduated on that basis? It would be a benefit to a considerable number of users of the roads who, I think, are entitled to the greatest amount of sympathy.


I want to say a word or two in support of the appeal advanced by the hon. Member for the Wallasey Division (Dr. M'Donald). Under the old regulations medical men were allowed a rebate on the petrol tax—not as a special favour to the profession, but for the reason that the medical man has to use his car for very necessary work. I believe medical men generally would have preferred that the duty should have been kept on petrol, because they have some justification for feeling that if abolished the advantage will go ultimately into the pockets of petrol proprietors. If the Minister of Transport sticks to the tax on power rather than on petrol, he ought to apply to medical men under the new Regulations the same principle as applied to them under the old Regulations; otherwise they will be very hardly hit. They will also be hardly hit in this respect, that in some parts of the country they have to keep two cars of high power because they cannot afford to wait, if their ordinary car breaks down, until it can be repaired. They must have a standby in order to carry on their practice, and I do suggest, therefore, that the tax should apply to only one car, provided there is reasonable ground for thinking that only one car is used at a time. I hope that that suggestion will have sympathetic consideration at the hands of the right hon. Gentleman. I have one other point I wish to refer to. In some parts of the country very high power cars are employed in order to overcome the hills. I have seen many so-called hills in England which in my part of the country would be termed "gentle undulations," suited probably for exercise by people suffering from heart disease. But in some parts of Scotland we have hills to climb for which very high power cars are required, and, therefore, the tax in this respect falls particularly heavy on the owners of the cars. This is a point which the right hon. Gentleman should take into consideration. At any rate, I hope that the advantage of the rebate on the petrol duty will in some way be extended to medical men in regard to the power duty, and that where they are compelled to keep two motors the tax will only be charged on one.


I want to enter a protest against this method of levying taxation on the people of this country. The right hon. Gentleman the Minister of Transport, replying on behalf of the Government to the criticisms of the opponents of this tax, stated that the burden would fall most heavily on the users of commercial cars, who, however, were willing to bear the burden because they desired to have better roads for the purpose of increasing their trade. My own opinion is that those who stated that did so because they could the more easily transfer the burden to the shoulders of someone else. This seems to be part of the general policy of the Government to devise methods of indirect taxation rather than to face the difficulty of getting rid of the enormous debt which has accumulated during the War. The party to which I belong would rather face that difficulty by means of a levy upon capital, but the Government are not willing to accept that solution and prefer to devise other means of raising the money; they are therefore resorting to methods of this kind to extract money from those least able to bear the burden. I therefore desire to enter my caveat, because I think the time will soon come when the general public will realise that they are being his on every side for the purpose of paying the enormous interest which has to be found year by year as a result of this huge debt. Take the case of char-a-bancs. The workman in summer time wants to get a day or two's holiday in the country but he will have to pay a proportion of this tax out of his wages. The tax has in fact, been framed for the purpose of extracting the greatest possible amount of money out of his earnings. It is the working classes of this country that will have to bear the burden, unless someone on the Treasury Bench is bold enough to come forward with a plan for reducing the debt and the annual charges for interest and for placing the burden on the right shoulders.

Question put, and agreed to.

Tenth and Eleventh Resolutions agreed to.

Twelfth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."


I desire to oppose this tax which proposes to make the Stamp Duties on transfer of stock and on marketable securities double those now charged. The duty charged at the present time on the transfer of stock is ½ per cent. on the consideration money, and it is proposed to make it 1 per cent.; that is to say, if a person purchases any stock, he will have to pay to the Government, in addition to the price which he has to pay for the stock, a duty of 1 per cent. on the money. The seller, although he pays nothing, will be penalised, because this heavy duty will render the market less free, and prevent people from changing their stock in the manner to which they have been accustomed. If a person who happens to own certain stocks thinks it will be advantageous to get rid of them and purchase something else, he will, if he is under the liability of paying 1 per cent on the consideration money, pause before he makes the change, and that will act seriously upon the people who deal in these securities. At the present time it is one of the great interests of the country that ample capital should be available for the various undertakings which are being carried on. If we are ever to come back to the world which existed before the War, not to mention the new world which the Prime Minister has talked about so often, but about which we do not hear so much now, the only way in which we can do that is by increased work and increased production. You cannot have increased production without capital, and if you are going to put difficulties in the way of companies or corporations raising money, you will do more harm than the good which would be gained by the amount received in tax. I am rather glad that my right hon. Friend the Minister without Portfolio (Sir L. Worthington Evans) is here, because he has considerable knowledge of these matters, and will be able to understand what the effect of the tax will be.

In addition to the hindrances and drawbacks which I have already enumerated, this increased tax will have the further disadvantage of reducing the marketability of various stocks. My right hon. Friend knows that it is necessary that dealers in these stocks should buy them at times when they are not absolutely certain that they will re-sell them at once, but will have to hold them until they can find a seller. If such a heavy tax as one per cent. is put upon them for doing this, they will have to take it into consideration when they purchase the stock, and, unless they can do so at such a low rate as to be able to recoup themselves, they will hesitate to purchase unless they have a buyer to whom they can pass the stock immediately. Some taxation, of course, must be imposed, but it always in the long run comes back to the consumer. That is what is occurring now, and it is one of the reasons why prices are so high. In this particular case, there is no doubt that the tax will be passed on to the ultimate purchaser. If it cannot be thus passed on there will be no market, and it will be difficult to realise stock. What we want at the present moment is to facilitate and encourage business as far as possible, and not to put any impediments in the way. I do not know whether my right hon. Friend is authorised to make any concession, or whether we must await the return of the Chancellor of the Exchequer, but I appeal to him, as a man of considerable business knowledge and ability, whether I am not right in this matter, and whether it would not be advisable in the interest, not of the people who are going to pay the tax, but of the community as a whole, to leave this tax alone. I hope I shall be able to get some satisfactory assurance on this point.

Lieut. - Colonel Sir J. NORTON-GRIFFITHS

I would ask my right hon. Friend on the Treasury Bench (Sir L. Worthington-Evans) to take into consideration, in connection with this particular tax, the jobber. If there is any financial depreciation on the Stock Exchange, the jobbers stand to be shot at by other professionals, and they claim that, in cases in which they have to take stock, and are holding it and supporting the market, and not for transfer to a permanent holder, some consideration should be shown to them in regard to this tax. I do not think that there is anyone on the Front Bench more capable than my right hon. Friend of realizing what that means to jobbers, especially in Consols, War Stocks, and what are called heavy securities. I have a letter from a gentleman who is one of the leading jobbers and one of the most respected members of the Stock Exchange, pointing out that the tax is much too heavy on the jobber, who in the ordinary course of business is constantly transferring the one or more special stocks he deals in, in and out of his name. Some days he has more stock on hand, on others less; and it seems unreasonable that, every time his stock-in-trade increases and he has to take up stock, he should have to pay a 1 per cent. duty. Security for loans is transferable to a banker at nominal consideration on a ten-shilling stamp, and our suggestion is that transfers of his own specialities should also be allowed to a recognized jobber at nominal consideration. We do not ask this in order that the jobber shoulid get off paying, but because the increased stamp will necessarily contract markets and make the dealing prices wider, with the result that the public will do less business and the tax be so far less productive. For these reasons we do not think the proposed concession would decrease, but rather increase, the revenue. There would be no practical difficulty. All that would be required would be an endorsement on the transfer setting out the lawful reason for nominal consideration, as is done now in other cases. I think it would allay great anxiety amongst members of the Stock Exchange, who are above any suspicion of trying to get out of paying their fair share of taxation if my right hon. Friend would make some answer to that point.


(Minister without Portfolio): The right hon. Baronet has brought objections to this tax which, of course, are general objections, and apply to almost any tax dealing with stamps. We are now putting stocks and shares transferable by deed on the same footing as real estate was put in 1910. It is an increase of taxation which will bring in a considerable revenue, and I am not prepared on behalf of the Government to do away with it; but when we came to marketability, there I think we can get a little closer together. As matters now stand, a jobber may be called upon not to pay the increased tax once but twice, merely because he as not completed his business in the course of five days, because all transactions on the Stock Exchange are cash transactions, and names have to be passed within five days or within a very short period afterwards. The stock jobber would be specially taxed if no exception were made, because he has, quite unlike any other trader, to pay a stamp duty upon the turnover of his stock-in-trade. I am authorised to say by the Chancellor of the Exchequer that that is a position which he recognises would not be wise in the interests of the marketability of stocks and shares in general, nor would it be fair to that particular class of transaction, and between now and the Finance Bill the actual method can be looked into, but it will be a concession strictly limited to the jobber, not to extend beyond the jobber in respect of stocks and shares which are his stock-in-trade, that is which he deals with daily as part of his business. It is not to extend to his investments or his dealings in other markets than his own, and it must be also in connection with transactions which are completed within a reasonable time, say two months—some such considerations as these which will protect the revenue. My own belief is, that there will be little or no loss of revenue if that method of dealing with the hardship is acceptable to the Stock Exchange and those who are affected by it, and if that is so and we find it is practicable, a Clause will be inserted in the Bill to bring that into operation.


As far as I am concerned, that will go a very long way to meet the objections which I have to the tax. I do not know about the general public. That is another thing. My chief point was the marketability, and I am very much obliged to my right hon. Friend for going so far as he has done.


I should like to add my appreciation to that which my right hon. Friend has expressed.

Question put, and agreed to.

Thirteenth, Fourteenth, and Fifteenth Resolutions agreed to.

Sixteenth Resolution read a Second time.


I beg to move, after paragraph (b), to insert the words Provided that, if either a husband or a wife who are living together claims to be separately assessed for 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. I do not feel that it is really necessary to offer any apology to the House for putting this Amendment down and asking the House to support it. To my mind it contains a great matter of principle. I believe these debates on this question of the marriage tax have come to stay. I believe it is a hardy annual which is going to remain a hardy annual until the tax is finally repealed. I also believe there is a growing feeling thoughout the country against this extraordinary anomaly of the marriage tax. I am not surprised that this is really a growing thing, because, after all, we live now with the burden of an enormous Income Tax. In the old days, when the tax was 6d., 1s., or 1s. 6d., people did not feel it so much, and when persons happened to marry, and they immediately became liable to a joint rate on their income, it was so small an additional tax that the injustice of it did not strike them so deeply. Now that we live under an enormous tax of 6s. in the £, the injustice of the tax naturally makes itself more heavily felt than in the past. The Chancellor of the Exchequer has rather unfairly led the House to suppose that this agitation is in favour of the rich. In answer to a question to-day he rather led the House to believe that if this marriage tax was abolished it would enormously and naturally benefit the rich. That is not really the case. Rich people marry as well as poor people, and if you take off the marriage tax you necessarily must benefit the rich as well as the poor. That cannot be helped. I do not think that on that account you ought to be prevented from doing what you can to maintain a great principle. It is not correct to say that very largely the rich will benefit. I am prepared to show that if my proposal is accepted people with very small incomes will benefit to a very great extent. I should fight this just as strongly on the matter of principle if it concerned only millionaires. I am sorry that it does not only concern poor people, because if it did only concern poor people so much political pressure would be brought to bear that the Government would give way.

I will give two illustrations to show that if my proposal is carried out it will benefit people with very small incomes. Let me take two persons who have unearned incomes. Take an unmarried man with an income of £400. Under the proposals of the Royal Commission the Income Tax will be 3s. in the £ on £250, so that he will pay a tax of £.37 10s. 0d. An unmarried woman with an income of £300 will be taxed on £150 at 3s. in the. £, and will pay a tax of £22 10s. 0d. The total tax payable by these two people before they are married will be £60. Under the proposals of the Royal Commission what happens? If they marry they will have a total income of £700. That is not a rich income. It means an income of about £12 a week. The Chancellor of the Exchequer cannot call these people rich. They will be taxed partly at 3s. in the £, and partly at 6s. in the £, so that their total tax when they marry would amount to £97 10s. compared with £60 before they marry. That is to say, under the proposals of the Royal Commission on Income Tax, which the Chancellor of the Exchequer, I understand, is going to carry out, the penalty on marriage will be £37 10s. 0d.

Take an illustration where two people have earned incomes. I will not take rich people, but comparatively poor people, an unmarried man with an earned income of £400 and an unmarried woman with an income of £200. Before they marry the man will pay a tax of 3s. on £225, amounting to £33 15s. 0d., and the woman before marriage will pay a tax of 3s. in the £ on £45, amounting to £6 15s. 0d. The total tax of the two before marriage is £40 10s. 0d. What happens on marriage? They have a total income of £600. They are not rich people. They have an income of about £10 a week. The Chancellor of the Exchequer cannot say that they are rich. On marriage they pay on part of their income a tax of 3s. and on another part 6s., or a total tax of £60 15s., compared with a tax of £40 10s. 0d. before marriage. Under the proposals of the Royal Commission on Income Tax, which the Chancellor of the Exchequer is going to adopt, these two poor people will pay a penalty tax on marriage of £20 5s. 0d. That is an unfair and unjust tax on the married woman, and I believe it absolutely indefensible. It is absolutely unfair to tax her upon somebody else's income, by which she may not benefit at all. She may not even know what her husband's income is. She may get no share of it, and yet her income is treated as part of her husband's income, and she has to pay a higher rate of tax.

Why do the Inland Revenue treat people who marry on an entirely different footing from anybody else who live together and enjoy a joint income? You have two sisters living together, very often, enjoying a joint income for all domestic purposes. You have two brothers living together, a mother and two daughters, a father in a mining district, with three or four sons bringing £30 a week into the house. All these people have the advantage of a joint income. You also have, unfortunately, people living together, a man and woman, unmarried. They enjoy the advantages of a joint income, but directly you get a man and woman to marry, and they have the advantage of a joint income, in that one instance alone the Inland Revenue step in and put a penalty on the marriage. It is more of an anomaly than that, because in the case of death duties you do not adopt the same principle at all. In the case of Income Tax you treat these two people as having a merged capital, and the income from that merged capital you treat by a joint rate; but when a man dies and leaves his capital to his wife you immediately treat that as separate capital. You do not treat it as the capital of the survivor and get death duties when the survivor dies. You treat the capital as separate capital, and the Chancellor of the Exchequer steps in and gets his tax. Therefore, you have two entirely different principles, and I cannot see any logic in it.

The Report of the Royal Commission was a very great disappointment to anybody who studies the Income Tax Law, and a great disappointment to people in the country. One hon. Member of this House was a member of that Royal Commission. I do not want to say a single disrespectful word about the Royal Commission, because their Report is one of the ablest I have ever read. I am certain that a vast number of their representations were sound representations, and I hope that they will be carried out, but I hope the Chancellor of the Exchequer is not going to shelter himself behind the Royal Commission, so far as this marriage tax is concerned. The Commission was not constituted so as to carry any real weight so far as that tax was concerned. There were 26 members of the Commission in and out—some resigned and others came on—and only one of these was a woman. There were 186 witnesses examined and only five were women. In regard to the marriage penalty 11 persons gave evidence, no fewer than eight were against the marriage tax and three in favour of it. And those three were Inland Revenue officials. It is not surprising in face of those facts that the marriage penalty was not abolished, and if you had another Royal Commission to-morrow and there were the same facts the same result would follow.

I am sorry to say that not only did the Royal Commission report that this marriage penalty should continue, but actually went out of its way to make this penalty worse. The Chancellor of the Exchequer is certainly putting on £100 abatement. He is taking off £50 to start with. Therefore, nominally, he is giving £50 extra, but he is doing it in such a way that the marriage penalty is increased. Under the present law there is only one instance where there is not a marriage penalty. That is where the joint income is not more than £500 and where both wife and husband earn. That fragment of justice has been swept away by the recommendations of the Royal Commission. Under the present system, in the case of a wife and husband with a total income of £370—which is not a rich income—the total tax at present, which would be at 2s. 3d., payable on that income would amount to £9. But under the recommendations of the Royal Commission, with the deductions and allowances, they would have to pay a tax at 3s. on £108, or £16 4s. in all, which is an additional penalty of £7 4s., or nearly double. Therefore the recommendations of the Royal Commission which the right hon. Gentleman is going to adopt, not only do not abolish the marriage tax, but discourage marriage by placing an extra penalty on the marriage bond.

This is not only an unjust tax, but I believe that it is an illegal tax. Before 1882 the Inland Revenue certainly had an excuse for treating a woman's income as part of her husband's income. The Married Woman's Property Act had not passed then. Before that Act was passed the woman on marriage lost the whole of her property in whatever she possessed. The whole of her property was treated as the property of her husband. But the Act of 1882 definitely laid down that the pro fits accruing to a wife should be her sole property. I have never heard the Chancellor of the Exchequer answer that case. I believe that under the law as it stands to-day, as the wife's income is her own—

Mr. DEPUTY-SPEAKER (Mr. Whitley)

If that be so, the hon. Member is out of Order.


I am only suggesting that it seems to me that the Inland Revenue in dealing with this tax is evading the provisions of a Statute. I will not proceed with that argument. I submit that the right hon. Gentleman ought to make very close inquiries from the Law Officers of the Crown in regard to the attitude of the Inland Revenue in this respect. It is perfectly ridiculous when you consider that women are nearly half the electorate and are able to sit in this House, vote on Finance Bills and tax the people, that the identity of their pro- perty should be completely wiped out. The Chancellor of the Exchequer will say, I am sure, that if he accepts this Amendment it may cost a great deal of money. I need not repeat the old argument that the greater the cost the greater the injustice it means. By the cost you practically measure to a penny the present injustice of the marriage tax. The Chancellor of the Exchequer has made a note—


What do you tell me, because I have not made it yet?


It is not quite the measure to a penny, because there will be evasions. But cannot he save what might be lost in this way by cutting down public expenditure of various kinds—for instance, cutting down superfluous labour exchanges, or dealing with the Super-tax. Super-tax payers might not like to have to bear the burden of course, but I am quite certain that the cost could be met by existing Super-tax payers. If my right hon. Friend tells me it would lead to evasions, I might suggest to him a way of preventing it. At present, in dealing with the death duties, you prevent evasion by saying that if somebody, within a certain period of his death, hands over property to another person in order to escape death duties, that property shall bear the tax. In the same way it would be perfectly easy, if a wife or a husband chose to hand over property to another in order to evade a certain proportion of the tax, to say that, except on a limit of ten years, the tax should be borne by that portion of the income which was handed over.

9.0 P.M.

I do not believe there is any difficulty in that at all. If the Chancellor of the Exchequer replies unfavourably, I intend to go to a Division. One is liable to misconstruction. Before this Debate I was told in the Lobby that if I went to a Division my attitude would be misunderstood, that people would say I was doing it merely for the sake of the rich. One may be misunderstood, but one cannot help it, and one must take the risk. This tax is an intolerable anomaly. I will not allude again to the words of the Financial Secretary. He said a year ago that it was an intolerable anomaly. I should very much like to ask the Chancellor of the Exchequer now, that I have him and the Financial Secretary together, whether he agrees with the Financial Secretary that it is an intolerable anomaly. I am quite certain that the agitation in this House and outside will not cease until this injustice has been wiped off the Statute Book.


I beg to second the Amendment, and I hope that the Chancellor of the Exchequer on this occasion will give a more sympathetic reply than those we have hitherto had from him. Whatever point of view one may take with regard to this particular tax, it can be described as my hon. Friend has described it as a penalty tax, surely there is no justification whatever for it. The cynic, I suppose, would say that marriage in itself is a sufficient penalty without an additional tax, while on the other hand those who take the opposite view would surely desire to impress upon the Chancellor of the Exchequer the necessity of a rebate to those who decide to enter into matrimony. There is one point of view which, if it does not impress itself upon the Chancellor of the Exchequer to-night, will certainly do so before very long. It arises from the circumstance that we in this House are now dominated by the voice of the sex which feels most resentful with regard to the imposition of this penalty. The number of women who are affected by this tax is growing year by year. Even before the War there were large numbers of women who were going into business and commercial life and the War has increased their numbers very largely. That section of the electorate will certainly resent having to suffer the payment of an additional tax if they decide to get married. I hope, therefore, that the Chancellor of the Exchequer will assure us that there is to be some redress for this intolerable state of affairs and that he will give practical effect to the excellent sentiments of the Financial Secretary to the Treasury.


It will perhaps be for the general convenience if I state at one the attitude of the Government towards this proposal. I recognise the sincerity and the depth of feeling with which my hon. Friend speaks upon this question. I have to admit that I differ from him in principle and fundamentally as to where justice lies. As a preliminary, may I try to clear up a misconception which has, I think, underlain some previous speeches of my hon. Friend? It seemed to me to betray itself, though to a lesser extent, in his speech to-night. But it was obvious in the speech of the Seconder. The hon. Gentleman, who had, I think, given an imperfect study to the question, appeared to think that it was a question as between women and men, and colour was lent to that by the Mover of the Amendment, when he suggested that because there was only one woman on the Income Tax Commission and because out of a great number of witnesses who gave evidence on an immense number of questions only a very few were women, therefore the report of the Commission was biased and prejudiced, and not a document behind which the Chancellor of the Exchequer ought to shelter himself. Whatever else this question is, it is not a question as between women and men. It is a question between married people and people who are not married, or between married people where the fortune available for the establishment is divided between husband and wife, and married people where the fortune is wholly in the hands of one or the other, one party either earning or bringing in investments in the form of acquired capital, whilst the other party brings in a pecuniary addition to the resources of the household. I think a great deal of prejudice would be removed if we could get that clearly into our minds. It is not a sex question.

My hon. Friend repeated an argument which I have heard him address to the House on several occasions, and to which I have replied, that this is an infringement of the Married Women's Property Act. It is nothing of the kind. My hon. Friend is usually very clear-headed, but he is so biased by his strong feelings on this subject that his usual clarity of thought deserts him. The Married Women's Property Act enabled the wife to hold property in her own control instead of having her property under the control of her husband. There is nothing in the Income Tax to alter that or to diminish the right of the wife in any respect whatever. What it does say is that where there is a married couple living together, whatever the incomes of either of them, each shall be assessed on the scale appropriate to the joint income of the two. The husband in the normal way is called upon to make the return, and he obtains the necessary information from his wife to enable him to fill it up. The wife is entitled to demand that she shall be separately assessed, and she can be separately assessed. Similarly, the husband is entitled to demand that he shall be separately assessed, and he can be separately assessed. There is no question of a compulsory assessment on one for the two if they demand separate assessments, but the rate of assessment is appropriate to the joint income, and that is the real issue between us. I hope that I have made my argument clear on this occasion, and that my hon. Friend will see that it is no infringement of the Married Women's Property Act and does not run counter to the decision of the Legislature at that time. I do ask the House to consider the Report of the Royal Commission upon this subject. I must trouble the House with some quotations. In paragraph 256 they say: We feel that the demand of those who favour this change is in effect not so much a demand for separate assessment or separate recovery of the tax—this"— as I have just explained— they can have under the existing law—as for a diminution of Income Tax liability on the ground that part of the joint income assessed happens to belong to the wife. There are two methods of recognising, by diminished taxation, the obligations of marriage. One is to make an allowance, a wife allowance or marriage allowance, from the joint income. This wife allowance is already granted under the present law, and we have made proposals"— which the House will remember the Government have adopted— which will in effect increase it considerably. The other is, by a complete severance in the treatment of husband and wife for Income Tax purposes, to effect a differentiation the results of which will depend entirely"— I would ask the House to note this— on the particular manner in which a given income chances to be distributed between the two members of the household. The first method, seeing that it affects every married couple, is far more likely than the second"— which is the method of my hon. Friend— to encourage marriage. I omit some words, and I continue in para. 257— It seems to us that it would be quite illogical, under the same system of taxation, to make an allowance which recognises the joint responsibilities of husband and wife, and at the same time to grant relief to each of the parties to the union as though they were complete strangers. If separate assessment were granted, the marriage allowance should equally be abolished"— I think that is common ground— and the result would be"— Again, I call the attention of the House to this— "a shifting of burdens from the rich to the poor, because in the vast majority of cases the wife has either no separate income at all or a separate income less than the amount of the present marriage allowance, and far less than the allowance we suggest should be made, and which the Government propose to make. Under these circumstances the Commission, who gave a great deal of time and attention to the subject and considered with the utmost care all the arguments put before them, conclude: We therefore recommend that the aggregation of the incomes of wife and husband should continue to be the rule. My hon. Friend will see that at any rate I have the support of the Commission, to whose ability and care, and to whoso work on every other point he paid a tribute. Does he not think it conceivable that the Commission may be right even where they disagree with him, since they are right and since he so readily recognises the care and attention that they have given to these matters? The Commission have made an increased re cognition of the responsibilities which marriage and fatherhood or motherhood bring. I think that they were inadequately recognised before, and I am very glad to adopt the recommendation of the Commission for an increased recognition of them. The result is that one of my hon. Friend's arguments has really lost its force to a great extent. It is quite true that at one stage last year I pleaded, almost incidentally, that in any case I could not forego the revenue which would be involved by the adoption of the proposals he then made, and that I must at least wait till the Report of the Royal Commission was received before taking any steps in the matter. If I now made the change which he asks me to make, the result would be, with the increased marriage allowances, that the revenue would not be a loser but a gainer. I should lose immediately some £18,000,000, but I should save on the marriage allowances £20,000,000. I should lose, as the Commission point out, on the rich, but I should gain at the expense of the less wealthy. I do not mean to say that is universal. The hon. Member takes the case of two people living separately, and says that when they marry such and such a result follows, but he never considers the case as between different married couples. That is the difference between us. I am considering it as a question of the taxation of married couples in the first place, and there he will see that the statement that I have made that his proposal would relieve the rich and penalise the poor among Income Tax payers is amply borne out by the Report of the Commission.

I will take some illustrations of my argument. Let me take, first, some cases of large incomes, cases where the joint incomes belong equally to the husband and the wife. I must in these cases take Income Tax and Super-tax together to get the true effect of the Royal Commission's proposals as contrasted with my hon. Friend's proposals. Suppose the joint income of husband and wife be £3,000, of which each has half, the Super-tax under the Budget scheme is £87 and the Super-tax under my hon. Friend's proposal would be nothing. If they had £4,000 equally distributed between them the Budget Super-tax would be £212, and it would be nothing under my hon. Friend's proposal. If they had £6,000, the Super-tax under the Budget scheme would be £537 and under his proposal it would be £174. There is a gain to married people with a joint income of £6,000, of which each have half, of £363 per year. If the joint income were £8,000, the gain would be £538, and if it were £10,000 the gain would be £738. The House will observe that as their income rises the relief under my hon. Friend's proposal is greater. Let us look at some of the smaller incomes. Take what is the far commoner case amongst the smaller incomes of the married couple, where the husband is making all the income and the wife has none. In that case, the wife having no income, the husband gets the advantage of the marriage allowance. If his total income earned is £200, then under the Budget proposals he pays nothing, and under my hon. Friend's proposal he pays £6 15s. If he has £250 to maintain himself and his family he would pay nothing under the Budget proposal, and under my hon. Friend's he would pay £13 10s. If his income is £300 per year, under the Budget he pays £6 15s., and by the alternative scheme, £20 5s. If his income is £400, under the Budget he would pay £20 5s., and under the alternative, £33 15s. If his income is £500, under the Budget he would pay £33 15s., and under the alternative, £60 15s. With an income of £700, under the Budget he would pay £87 15s., and under the alternative, £114 15s. If his income is £1,000, under the Budget he would pay £168 15s., and under the alternative, £195 15s. Surely that does not make the taxation fairer.


I wish the right hon. Gentleman would deal with the case of the penalty on marriage.


It is common ground that husband and wife will pay more when living together as married people than they would pay if they lived separately unmarried or if they lived together. I am dealing now with married people and with the contrast between the two proposals as they affect married people among themselves. Nobody I think can doubt that the Budget proposals are much fairer to married people than the alternative suggested by my hon. Friend. I have shown by example that in the larger incomes where the income was half owned by wife and husband my hon. Friends proposal would give relief from the taxation which the Budget imposes, but where the income was on a smaller scale and wholly earned by the husband, and it would be equally true if wholly earned by the wife, and where the incomes ranged from £200 to £1,000 in every case the Budget proposal is more favourable to these small taxpayers than my hon. Friend's. The number of cases where the total income of husband and wife does not exceed £800, and where the wife has no income is estimated at 2,200,000, and in those vast number of cases the proposal put forward by my hon. Friend would involve an additional tax imposed on people quite unable to bear it, and imposed, I will not say in order to give relief, but with the effect of giving relief to people with a much greater capacity to pay. Therefore in both directions in effect the change would be to make the tax obey less closely than it does now the test of ability to contribute to the revenue.

Let me give one other illustration of the effects of my hon. Friend's proposal. Take the case of three households side by side inhabited by three married couples, and let us assume that for each household there is an income of £400. In the first house the income is all earned by the husband, and in the second house all earned by the wife, and in the third house it is derived from investments, or what we have been accustomed to call unearned income, and in their case it is equally divided between husband and wife, each of them drawing £200 per year from investments. In two of the houses the income is dependent on the continued earning capacity of the member of the household who is earning it, and in the third house the income is derived from investment which would presumably continue, and which would be independent of the life of the possessor. Which of those three households, if there be any distinction, has the greater capacity to pay? Surely it is the household which derives its income from investment and an income independent of the life or exertions of the possessor. Let us see how the Budget and my hon. Friend's proposal affect the two. Under the Budget proposal the tax payable by the two members of the household who derived £200 each from investment is £26 5s., as compared with £20 5s. in each of the other houses where the income is derived from earnings. Under my hon. Friend's proposal the household which I think is the one best able to make a larger contribution would be reduced from £26 5s. to £19 10s., and the two households in which all the income is earned would have their tax raised from £20 5s. to £33 15s. I have dealt with this subject at length, partly in deference to my hon. Friend's strong feeling on the subject, and partly because I know the subject is one which has evoked a great deal of interest in the House. I do not shelter myself behind any sum. I do not say I cannot afford the money to redress an injustice. I say boldly that the proposals in the Budget are much more just as between taxpayer and taxpayer, as between married couple and married couple, than the proposals of my hon. Friend. I say that the case which we deal with most leniently is the case which is commonest amongst the people of small incomes, and the case which he deals with most leniently, though that is not his object, the case that he relieves to a much greater extent, is the case in which there is the greater ability to pay.


I think it is not inappropriate that on this important topic at least one Member of the Royal Commission on the Income Tax should try to make plain the reasons which actuated us in arriving at this conclusion. I can assure the hon. Member for Wood Green (Mr. G. Locker-Lampson) that we appreciate very highly the kindly reference which he made to the labours of the Commission. I should also say at once that I personally regret the fact that only one lady was a member of that Commission, a point for which none of us was responsible, but one which might have been remedied at an early stage and so have removed the only grievance which I think can be urged in this connection. On that point, however, I have no hesitation in saying to the House that it would be quite impossible to argue that women had suffered in the consideration of their claims as regards the Income Tax law and practice of this country. Very few women appeared as witnesses before the Royal Commission, but the few women who did appear appeared at least in a number of cases as representatives of organisations of women, and claimed to speak for hundreds of thousands of the women of this country, and framed a programme which we have every reason to believe was the result of the deliberations of their societies. I think it is my duty to make also this statement, which may be by no means agreeable to many Members of this assembly. Many of us on these Benches have fought in season and out for Women Suffrage, for the rights of women in public life, and we will not be accused of doing anything which would penalise either married or unmarried women in this country. I think it fair to say, however, and I believe I am expressing the opinion of nearly all the members of the Commission on the Income Tax when I urge that the women witnesses were on the whole disappointing, and at least one of the witnesses made statements which would not bear examination and which did no service at all to the cause which she was sent there to promote.

We are grateful to the right hon. Gentleman for making it perfectly clear that under the existing system each spouse may elect to be separately assessed, and in the second place if a business is carried on there is power to make a separate claim for abatement or exemption up to a general limit of £500 as regards the total income. That seemed to us in the Royal Commission—and I remember the state of our minds well— to be as far as we could possibly go in the recognition of this claim, because, it led on to what was really the kernel of this controversy, which amounted simply to a claim from the point of view of citizenship. Five times out of six, the consideration which was advanced was that of citizenship and the right of women to what was thought to be their protections and safeguards in keeping with what we may call the development of British law from the point of view of the Married Women's Property Acts and kindred legislation. That is clearly what was in the minds of many of the advocates of this movement, and when we have regard to the fact that a separate assessment is possible and that that applies in regard to the exemptions and abatements to business, we felt we had already conceded the principle of citizenship and that on that head we could not carry our concession any further. I want now to try and refer to one or two of the arguments which were used. I think it unnecessary to debate the financial side of this proposition, because the Chancellor of the Exchequer has put exactly what was in our minds. I have not the least hesitation in saying that the adoption of my hon. Friend's proposals would penalise the comparatively poorer people in this country and would lead to a state of affairs which would confer in the long run no real advantage even on the class which he has particularly in mind.

A very curious argument was used It was argued by one of the witnesses on behalf of the Women's organisations that the effect of the present system was to compel a comparatively large class of people in this country to live in a state of immorality for the purpose of evading Income Tax. I am sure hon. Members will agree with me that in cross-examination a proposition of that kind was bound to break down, but I mention it here in passing to show the temper and disposition which actuated a good deal of this campaign. We are all engaged in tasks of social amelioration, and we do not want, either from the side of law or of taxation or anything else, to perpetuate a system which is going to give rise to immoral conditions in this country, but I suggest that an argument of that kind really does not apply. If people prefer or wish to live in that state, all the taxation of all the world, or of any country in the world, will not prevent it, and I should say the influence of a consideration of this kind on that particular problem is practically negligible. In the second place, what did the representatives of the women's organisations say? They said that this tax penalises marriage. I may be, and I rather think I am, a very stupid Scotsman, but I am quite sure of this, that if two people genuinely love one another, all the taxation in the world will not keep them apart, and I am quite satisfied also that the incidence of the Income Tax has very little influence on the number of people who get married in this country, either before they are married or after the marriage itself takes place. The real problems affecting marriage are very different They are problems of remuneration, and above all, of housing, and of a prudent Scottish caution which I wish were better recognised south of the Tweed. In this connection the argument really did not hold water What did we do? We raised the limit for married people to £250, and I think I can give a kind of popular explanation of the position of the Income Tax on married people with two or three children in this country when I say that they will have, with two or three children, approximately between £350 and £400 before they are liable to be taxed at all. We on these Benches—and I desire to make this plain—stand firmly by direct as opposed to indirect taxation, and it is only logical on our part to say, immediately following that argument, that we should prefer an In-come Tax at an even lower limit but for the fact that we are compelled to safeguard a standard of life for the great body of the population in this country, and that we require to apply that to direct as well as to indirect taxation. That is our position. I think on the whole—and I believe I express the mind of the great majority of the Members of the Labour movement—the Royal Commission has been very generous in this respect. I think, in existing circumstances, we have gone as far as it was possible to go, and, having done so, we have to a very real degree met the case of my hon. Friend—a case which, I admit, he put with great ability and great sincerity—so far as we humanly and possibly can. In the third place, may I direct attention to a very curious contradiction on the part of witnesses for separate assessment. They argued very strongly for the individual rights of husband and wife, but the very same people who made that proposition asked for increased allowances for the children, thereby recognising the joint obligation so far, and, having pleaded in that connection, some of us did not understand why they should seek to rule out entirely what we may call the major proposition in this problem.

There is one question which I am going to put in conclusion. This agitation is not an agitation of revenue at all. It is partly an agitation of history and partly an agitation of an artificial kind in a sort of controversy between the sexes. I read an article in a review which said that the aim of this campaign, added to all the other campaigns which were being carried on, was to free the married woman from what this writer termed "mediæval subordination." I think that is a quite good cause, and it is one which we certainly support, but we are not going to lift people from mediaeval servitude or subordination by a few pounds per annum under the Income Tax Law of Great Britain. I think a race of free wives depends on education, on social improvement and economic law. These were the things which were in the minds of all the members of the Royal Commission, and this proposition found support only from the one lady member and from one other member of that very representative body. I think we have applied our minds to it fairly, and I think I can say also that the Labour movement stands behind the Chancellor of the Exchequer in this matter, because we believe that, on balance, his proposals are much more just and much fairer than the proposals of my hon. Friend.


I should not have intervened in this Debate but for the fact that I have somewhat recently been in touch with a constituency in which this question largely exercised the minds of the married women. I need not say that I have been very much impressed with the arguments of the hon. Gentleman who has just sat down, but I take the view that we are claiming, not a matter of Treasury expediency in the raising of taxation, but we are standing for what I may call social justice and the equality of woman with man. I do most sincerely feel that we have no right to penalise a woman because she is married. The Chancellor of the Exchequer denied my hon. Friend's contention that this was an illegal impost, but I would, if I may, quote to him the terms of the Married Women's Property Act, and contrast it with the terms of the Income Tax Act under which he is electing to put on this impost. The Act—and I think it was the first charter of the women, and one which they are not going lightly to give up, even for Treasury ex-pediency—says: Every woman who marries after the commencement of this Act shall be entitled to have and to hold as her separate property all the real and personal property which shall belong to her at the time of marriage, or shall be acquired or devolve upon her after marriage. That is a very explicit statement of the right of the woman to separate treatment and to have and to hold property which belongs to her. Against that we have the Income Tax Act which, in a humiliating clause in my opinion, declares that The profits of a married woman living with her husband shall be deemed to be the profits of the husband, and shall be assessed and charged in his name and not in her name or in the name of her trustee. Those two quotations show where we opponents of this stand. We stand on the question of social justice, and I say it is a wrong thing at this time of day that you should say to a woman, "If you choose to get married you shall cease to have your own identity in the property you hold, and you must throw it in with that of your husband, and we shall assess you on the whole amount." I read in the Income Tax Commission's Report that what guided them is ability to pay. If you are going to have ability to pay as a test, I could point out hundreds of houses in this country where there are rich sons and daughters with incomes, and fathers with good income too. Do we ever suggest that all their incomes should be lumped together? What a gorgeous Super-tax you would get from many of the big homes. It is only where the married woman is concerned that this preposterous proposal is put forward by the Chancellor of the Exchequer, and the hon. Gentleman who has just sat down quite rightly sneered in his Scottish way—if there is anything offensive in that, of course it was not intended—let me say in his Scottish humour he threw aside the idea that there was any possibility of people who love one another not marrying because of the tax. Anyone who has anything to do with social work in this country knows very well the great difficulty to-day in getting certain classes of people to go through the ceremony of marriage.

Let me quote what an hon. colleague of the Chancellor of the Exchequer said on this subject a year ago. I refer to the Secretary to the Treasury. I am not surprised at any change of view. We shall hear very likely later on to-night some quotations from what was said about the Excess Profits Duty, and we shall see how; easy it is for right hon. Gentlemen and hon. Gentlemen on the Treasury Bench to forget their words. This is what the Secretary of the Treasury said only a year ago: I agree freely as an individual, and as a married man, that there is a great deal to be said for the case that has been presented to-night. It has always been an intolerable anomaly to feel that, so far as taxation is 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. I hope the hon. Gentleman will stick to that. It is my opinion and the opinion of many of those who support my hon. Friend in his Amendment. I hope some better reasons will be given for this tax than the fact that it brings in a certain amount of money. More money will not do away with a great social injustice that married women should be treated differently from other women. It is a social injustice. The great charter that the women received through the Married Women's Property Act you are taking away by the present scheme and saying that the woman is still a chattel of her husband by lumping their earnings together, whatever they may be. I ask the House to mark its sense of their feeling in this matter by supporting my hon. Friend in the Lobby if he carries his Amendment to a division.


I did not hear my hon. Friend opposite (Mr. Locker-Lampson) speak to-night, but I have heard him on this subject before, and I have always found his statements were very accurate, and carried very great weight, to my mind at any rate, and I have not any doubt that he has repeated his arguments again this evening. I listened very carefully to the statement made by the Chancellor of the Exchequer against accepting the proposal of my hon. Friend. Whatever the reason I do not know, but I could not follow his arguments. The object of this Amendment is to provide that where a man and a woman, married, each have an income of their own—I do not for the moment go into the question of whether it is earned or unearned—those incomes should be assessed separately. I fail to see how the argument of my right hon. Friend that this would act hardly upon poorer people can be maintained. For the sake of argument, suppose that a man has an income of £300 a year and marries a woman with £100 a year. The instances that were taken by the Chancellor were always instances where the amount of the income was the same in each case; but there are many instances where they are not the same. The amount of the husband's income may be £900 and that of the wife £200. This brings them over the £1,000 limit. There are all sorts of instances of that sort with which the Chancellor did not deal. I fail to see why, because a man with £200 a year marries a woman with £200 a year, that that income should be assessed as one. This is really an important matter. If there are any exceptions they could be dealt with in the Finance Bill. Yet at the same time the Chancellor could accept the Amendment of my hon. Friend.

The reform advocated would not bring about any of the terrible things which the Chancellor of Exchequer fears, with one eye on the party opposite. Supposing it did? What we have to consider is whether the thing is right or wrong. We have not to consider whether a man who happens to be working with his hands will lose a little, or whether the man who happens to be working with his brains will gain a little. What we have to aim at is a right and a just tax. If you are going to take the question of the ability to pay where will you stop? There are a large number of hon. Members opposite who consider—well, who did consider, I think!—that £400 a year was a sufficient income. I understand now they think that on the whole £600 is a better. There have been suggestions lately for an increase of the salaries of hon. Members. Supposing the salary is raised to £800. Then is it the idea of hon. Members opposite that if the ability to pay is compared with the greater ability to pay of a man in receipt of £8,000 a year that you should take from that man £7,200 and leave him as the others, with the £800 a year? We may come to this if we proceed upon the argument of ability to pay.

Three instances were taken by the Chancellor of the Exchequer. He spoke firstly of an earned income by the husband of £400 a year; secondly, of an earned income of £400 by the wife; and in the third case, the £400 was unearned income derived from investments, part of which belonged to both. He suggested that it was quite right to apply the higher plane of taxation to the third case. I think he is quite wrong. All investments and unearned income, so-called, are the result of saving, and what is it we want at the present time if not to encourage saving? The income for investments is the result of savings, and savings made probably during a life of hard work. It may be that both husband and wife instead of going to cinemas and smoking—and I am sorry to say that women smoke nowadays—instead, I say, of spending their money on amusements, they saved in order that there might be something for their old age. They did not come, and say: "Let the State provide us with old-age pensions." They saved, and that is the proper thing to do. I think they ought to be taxed less, if there is to be any difference, than other people who spent their money.

10.0 P.M.

After all, to what does this amount? The real reasons is that a certain amount of income will be lost. If the income is wrongly taken why should it wrongly taken why should it not be lost? The hon. Member opposite (Mr. Graham) said it was absurd to think that people who were in love would be deterred from marriage by this particular tax. If a man marries a woman why should he be taxed differently to what he would be if he lived with that woman without marriage. The ability to pay may be exactly the same in both cases, and that is a point you cannot get over. It is said that the burden would fall more upon the rich than the poor. In a great many cases the rich man has got this world's goods by hard work, or by common-sense in keeping that which his father left him. The only other argument I heard advanced was that the Royal Commission on the Income Tax decided against what is now proposed in this Amendment.

Of course, it is not for me to call in question the decisions of a Royal Commission. No doubt they gave great care to their considerations. I do not attach very great importance to the fact that there was only one woman on that Commission. It should be equally right and just whether women were on the Commission or not, but the Commission heard what the women had to say from their point of view. I do not think, however, it follows that the Commission were a divine body, and that their decisions should not be criticised. They have issued a very voluminous document. I have not read it all, or even any very great part of it, but I cannot understand the fashion of Governments shelving their responsibility on Royal Commissions, and treating them as something sublime whose decisions can never be ignored. I do not believe the decisions of Royal Commissions are any better than anybody else's decisions. They come to conclusions, some of which may be right and some of which probably are wrong. I hope my hon. Friend will go to a Division, and if he does I shall have great pleasure in supporting him.


The one point which I thought the right hon. Baronet who last spoke would have made was that in the opinion of the majority of Members who watch the deliberations of Royal Commissions, those bodies are generally appointed by a Government which wishes to bury a rather difficult topic. If there is any serious opposition to anything a Government proposes to do, a Royal Commission is usually appointed, and, after that body has given its verdict, nothing more is heard of it. Royal Commissions, be it remembered, are appointed by the Government themselves, and really we ought not to take seriously the verdict of judges appointed by the prisoner in this or any other matter. The Committee, in this question of Income Tax, gave a great deal of time and attention to the particular subject now under consideration, and in their report they say: We have considered with the utmost care all the arguments that have been put before us, and we have been forced to the conclusion that the grievance complained of is more vocal than real; in other words, that it is a grievance rather than a hardship. I do not know whether any members of the Royal Commission happen to have incomes of £400 a year. It is quite possible they may have done so. But I believe there were 26 members, one only of whom was a woman, and she is entitled to say that with respect to the financial load the two sexes were not equally represented. Let us assume for one moment that they were dealing with a case in which the income was £400 a year. Let us assume that a man with £400 a year decides to take in matrimony a lady also with an income of £400 a year. Before marriage the amount of income tax which these two paid was £78 6s. per annum. The day after they were married—and I seriously submit this to the Treasury—the day after they had taken on responsibilities which cannot lightly be undertaken, and which if lightly undertaken bring with them their own burdens, responsibilities which if not undertaken will conduce to the suicide of the race, responsibilities which therefore ought not to be penalised, but which they should be rather encouraged to undertake—the day after they have undertaken these responsibilities, the tax upon their joint income, instead of being £78 5s. per annum, amounts to £125 l1s.! Can any Chancellor of the Exchequer come to that box and tell the House of Commons it is sound policy, either socially or financially, to tell a young man and young woman who contemplate entering for the matrimonial stakes in the interest of the nation—for I would remind hon. Members that the Prime Minister himself has said that the capital of the State is in its good citizens—that they will be specially taxed? Can the right hon. Gentleman suggest that when two people desire to enter into matrimony they should, because of their wish to produce good citizens, be taxed to the extent of £47 5s. per annum, or approximately a 5 per cent. increase of taxation? It is unfortunate, to say the least of it, that such an argument should be advanced. If we were not led aside by various other conflicting interests, but applied ourselves to this one question of joint Income Tax, and if we were free to vote as our hearts and our reason dictate, the Government would lose in the Division Lobbies to-night. I understand that the hon. Members of the Labour Party rely entirely on their £400 a year, but assuming they were fortunate enough to find a lady who not only possessed all the charms they desired, but also an income of £400 a year, their tax would be increased by £47 5s. per annum. The Chan- cellor of the Exchequer says, "Look at the rich people," but surely there are other ways of getting their money than by penalising the unfortunate middle class, who are the backbone of our race, and who, between capitalist attacks on the one side and labour attacks on the other, are being squeezed almost flat on a hopelessly inadequate income. They are the people who pay every time, and they are very inadequately represented in this House. They do not organise and have no unions. Any union they have ever attempted, so far as we have seen, has not proved politically successful. They cannot threaten to withdraw their labour. Probably hon. Members on the Labour Benches here would consider it to be of little value. [HON. MEMBERS: "No, no! We welcome it."] I am glad to hear that we have at least that admission, that it is not only the person who soils his hands who labours in this country to-day. [An HON. MEMBER: "They are our principal supporters."] If that is so, why are not the Labour Members supporting them?

These people often have four or five sons, to whom they are endeavouring to give the education they enjoyed themselves, and which could be enjoyed to-day were the purchasing power of the pound different from what it is. We have got to a stage when it is the grim necessities of life that count. The prices of essentials have been raised so much in the last two or three years that there is a class in this country who are up against the question of the grim necessities of life, which they never expected to have to face. What does it matter to the man with £20,000 or £30,000 a year whether he pays an extra £1,000 or £2,000 because his wife has an income too? But if a man has only £400 a year, to tax him to the extent of 10 per cent. extra on that because he decides to get married is penalising marriage, and is a most unjust and immoral tax. I hope we shall find sufficient hon. Members in this House to show the Government that there is a determination among them, whether they be rich or poor, to take the part of the new poor in this country to-day. and to do what they can to represent that great unorganised class which has done so much in the past for this country and to whom we look for stabilising our industrial state. The class of people penalised by this are penalised by every other form of legislation which has been introduced. They are penalised because they have no representatives here. Whether it be in housing or in any other matters, no provisions are made for this class. They have to look after themselves. I ask Labour Members not to support the Government on this tax simply because they think they are getting money out of the rich. If they want to get money out of the richer classes, why cannot the Chancellor of the Exchequer make a limit of £1,000? Why cannot he say he will not tax joint incomes unless they exceed £1,000 or £1,500, which is the equivalent of £600 to £800 before the War? Why cannot the Labour Members insist upon his making that joint income exempt? I appeal to what representatives of the Labour party are present to remember that they themselves enjoy a salary which may subsequently be penalised by this new tax, and that there are a vast number of men and women who are really suffering to-day, who have no spokesman in this House, who have no strike with which to threaten a very nervous Government, to say the least of it, who have no power to bring pressure to bear on the Government. I am perfectly confident that if the leaders of the Labour party told the Government point blank that if they proposed to go on penalising the marriage of the middle classes they would call a general strike, the Government would capitulate within 24 hours.


I want to ask if I put a question down, will the Financial Secretary to the Treasury supply the figures given by the Chancellor of the Exchequer as compared with the figures given by the hon. Member (Mr. Locker-Lampson), and then we shall be able to make comparisons instead of listening to the repetition of speeches?


Of course, any specific question the hon. Member likes to put down will be answered. I will confer with my right hon. Friend to see if it is possible to make any statement of the nature he desires. The figures given by my right hon. Friend to-night will be found in the OFFICIAL REPORT to-morrow.


Before we go to a Division, I desire to say on behalf of a large number of people of this country that I consider this tax an unprincipled tax, not only because it is a tax upon marriage, but because it is devoid of principle. You must make up your mind whether you are going to tax the individual or the family, and follow one or other of these principles throughout. We had an extremely interesting speech from the Chancellor the Exchequer, but the arguments that he used with regard to married couples apply equally to two brothers or two sisters living together, or to a man and woman living together who are not married. Therefore, they can all be discounted for that reason. One other point which shows how unprincipled this tax is is this: either a man and a woman who are married retain their individuality or else they become one person for the purpose of taxation. You

cannot have it both ways, but the Chancellor of the Exchequer does have it both ways for the purpose of taxation. He says that for the purpose of Income Tax and Super Tax the income of a man and his wife are to be added together; but no sooner has the breath of that woman passed out of her by death than the Chancellor of the Exchequer says to the husband: "This is not the same person as you having the same income; you must pay Death Duty on the property of this person." This is entirely devoid of principle, and I hope the House will reject it.

Question put, "That those words be there inserted."

The House divided: Ayes, 96; Noes, 203.

Division No. 94.] AYES. 10.23 p.m.]
Atlair, Rear-Admiral Thomas B. S. Hall, Lieut.-Col. Sir F. (Dulwich) Oman, Charles William C.
Archdale, Edward Mervyn Harbison, Thomas James S. Palmer, Charles Frederick (Wrekin)
Atkey, A. R. Harmsworth, Hon. E. C. (Kent) Pinkham, Lieut.-Colonel Charles
Banbury, Rt. Hon. Sir Frederick G. Hayward, Major Evan Ramsden, G. T.
Barnes, Major H. (Newcastle, E.) Hilder, Lieut.-Colonel Frank Redmond, Captain William Archer
Barrand, A. R. Hinds, John Rees, Capt. J. Tudor- (Barnstaple)
Barrie, Charles Coupar Hoare, Lieut.-Colonel Sir S. J. G. Remnant, Colonel Sir James F.
Billing, Noel Pemberton- Hotchkin, Captain Stafford Vere Renwick, George
Bowyer, Captain G. E. W. Johnson, L. S. Richardson, Alexander (Gravesend)
Breese, Major Charles E. Jones, Sir Evan (Pembroke) Samuel, Samuel (W'dsworth, Putney)
Brittain, Sir Harry Jones, G. W. H. (Stoke Newington) Scott, A. M. (Glasgow, Bridgeton)
Burn, Col. C. R. (Devon, Torquay) Jones, Henry Haydn (Merioneth) Seddon, J. A.
Campbell, J. D. G. Kenyon, Barnet Smith, Sir Allan M. (Croydon, South)
Cecil, Rt. Hon. Evelyn (Birm., Aston) Kiley, James D. Sprot, Colonel Sir Alexander
Child, Brigadier-General Sir Hill Kinloch-Cooke, Sir Clement Sugden, W. H.
Colfox, Major Wm. Phillips Knights, Capt. H. N. (C'berwell, N.) Surtees, Brigadier-General H. C.
Colvin, Brig.-General Richard Beale Lane-Fox, G. R. Sykes, Sir Charles (Huddersfield)
Coote, Colin Reith (Isle of Ely) Law, Alfred J. (Rochdale) Terrell, Captain R. (Oxford, Henley)
Coote, William (Tyrone, South) Lister, Sir R. Ashton Thomas-Stanford, Charles
Cory, Sir C. J. (Cornwall, St. Ives) Lloyd, George Butler Warren, Lieut.-Col. Sir Alfred H.
Cory, Sir J. H. (Cardiff, South) Lyle-Samuel, Alexander Wheler, Major Granville C. H.
Curzon, Commander Viscount MacVeagh, Jeremiah Wigan, Brig.-Gen. John Tyson
Davies, Major D. (Montgomery) Magnus, Sir Philip Willey, Lieut.-Colonel F. V.
Davison, Sir W. H. (Kensington, S.) Mallalieu, F. W. Williams, Lt.-Com. C. (Tavistock)
Entwistle, Major C. F. Mitchell, William Lane Wilson-Fox, Henry
Finney, Samuel Moles, Thomas Winterton, Major Earl
FitzRoy, Captain Hon. E. A. Moore, Major-General Sir Newton J. Wood, Sir J. (Stalybridge and Hyde)
Glanville, Harold James Morris, Richard Young, Sir Frederick W. (Swindon)
Goff, Sir R. Park Newbould, Alfred Ernest Young, Robert (Lancaster, Newton)
Gould, James C. Newman, Sir R. H. S. D. L. (Exeter)
Gritten, W. G. Howard Nicholson, William G. (Petersfield) TELLERS FOR THE AYES.—
Guinness, Lieut.-Col. Hon. W. E. Nield, Sir Herbert Mr. G. Locker-Lampson and
Hailwood, Augustine Norton-Griffiths, Lieut.-Col. Sir John Colonel Willoughby.
Agg-Gardner, Sir James Tynte Brace, Rt. Hon. William Craig, Colonel Sir J. (Down, Mid)
Archer-Shee, Lieut.-Colonel Martin Bramsdon, Sir Thomas Craik, Rt. Hon. Sir Henry
Armitage, Robert Bridgeman, William Clive Davidson, Major-General Sir J. H.
Astbury, Lieut.-Commander F. W. Briggs, Harold Davies, Alfred Thomas (Lincoln)
Baird, John Lawrence Britton, G. B. Davies, Sir David Sanders (Denbigh)
Baldwin, Stanley Bruton, Sir James Davies, Thomas (Cirencester)
Balfour, George (Hampstead) Buchanan, Lieut.-Colonel A. L. H. Davison, J. E. (Smethwick)
Barnett, Major R. W. Buckley, Lieut.-Colonel A. Dawes, James Arthur
Barnston, Major Harry Bull, Rt. Hon. Sir William James Denniss, Edmund R. B. (Oldham)
Bell, James (Lancaster, Ormskirk) Cape, Thomas Doyle, N. Grattan
Benn, Sir A. S. (Plymouth, Drake) Carr, W. Theodore Edwards, C. (Monmouth, Bedwellty)
Bennett, Thomas Jewell Carter, W. (Nottingham, Mansfield) Edwards, Major J. (Aberavon)
Birchall, Major J. Dearman Cayzer, Major Herbert Robin Eyres-Monsell, Commander B. M.
Bird, Sir A. (Wolverhampton, West) Chamberlain, Rt. Hn. J. A.(Birm., W.) Fell, Sir Arthur
Blair, Major Reginald Coates, Major Sir Edward F. Flannery, Sir James Fortescue
Blane, T. A. Coats, Sir Stuart Foreman, Henry
Borwick, Major G. O. Cobb, Sir Cyril Forestier-Walker, L.
Bowerman, Rt. Hon. Charles W. Courthope, Major George L. Forrest, Walter
Boyd-Carpenter, Major A. Cowan, D. M. (Scottish Universities) Fremantle, Lieut.-Colonel Francis E.
Galbraith, Samuel Locker-Lampson, Com. O. (H'tingd'n) Seager, Sir William
Ganzoni, Captain Francis John C. Lorden, John William Sexton, James
Gibbs, Colonel George Abraham Lort-Williams, J. Shaw, William T. (Forfar)
Gilmour, Lieut.-Colonel John Loseby, Captain C. E. Short, Alfred (Wednesbury)
Glyn, Major Ralph Lunn, William Shortt, Rt. Hon E. (N'castle-on-T.)
Goulding, Rt. Hon. Sir Edward A. Mackinder, Sir H. J. (Camlachie) Simm, M. T.
Graham, W. (Edinburgh, Central) McLaren, Hon. H. D. (Leicester) Smith, Harold (Warrington)
Grant, James A. M'Lean, Lieut.-Col. Charles W. W. Smith, W. R. (Wellingborough)
Gray, Major Ernest (Accrington) Macleod, J. Mackintosh Spencer, George A.
Green, Albert (Derby) Malone, Major P. B. (Tottenham, S.) Stanier, Captain Sir Beville
Green, Joseph F. (Leicester, W.) Manville, Edward Stanley, Lieut.-Colonel Hon. G. F.
Gregory, Holman Martin, Captain A. E. Stewart, Gershom
Greig, Colonel James William Matthews, David Strauss, Edward Anthony
Griffiths, T. (Monmouth, Pontypool) Mond, Rt. Hon. Sir Alfred M. Sturrock, J. Leng
Grundy, T. W. Moreing, Captain Algernon H. Sutherland, Sir William
Guest, Major O. (Leic., Loughboro') Morrison, Hugh Swan, J. E.
Gwynne, Rupert S. Mount, William Arthur Talbot, G. A. (Hemel Hempstead)
Hacking, Captain Douglas H. Munro, Rt. Hon. Robert Taylor, J.
Hamilton, Major C. G. C. Murray, Major William (Dumfries) Terrell, George (Wilts, Chippenham)
Hartshorn, Vernon Myers, Thomas Thomson, T. (Middlesbrough, West)
Hayday, Arthur Nail, Major Joseph Thomson, Sir W. Mitchell- (Maryhill)
Hennessy, Major J. R. G. Neal, Arthur Thorpe, Captain John Henry
Henry, Denis S. (Londonderry, S.) Palmer, Brigadier-General G. L. Tryon, Major George Clement
Herbert, Dennis (Hertford, Watford) Parkinson, John Allen (Wigan) Wallace, J.
Hickman, Brig.-Gen. Thomas E. Parry, Lieut.-Colonel Thomas Henry Walsh, Stephen (Lancaster, Inee)
Hirst, G. H. Perkins, Walter Frank Walters, Sir John Tudor
Hohler, Gerald Fitzroy Pickering, Lieut.-Colonel Emil W. Walton, J. (York, W. R., Don Valley).
Hope, James F. (Sheffield, Central) Pollock, Sir Ernest M. Ward, Col. J. (Stoke-upon-Trent)
Hope, J. D. (Berwick & Haddington) Pownall, Lieut.-Colonel Assheton Waterson, A. E.
Hopkinson, A. (Lancaster, Mossley) Prescott, Major W. H. Wedgwood, Colonel J. C.
Howard, Major S. G. Pulley, Charles Thornton Weston, Colonel John W.
Hunter-Weston, Lieut.-Gen. Sir A. G. Purchase, H. G. Whitla, Sir William
Hurd, Percy A. Rae, H. Norman Wignall, James
Hurst, Lieut.-Colonel Gerald B. Raeburn, Sir William H. Williams, Aneurin (Durham, Consett)
Irving, Dan Raw, Lieutenant-Colonel N. Williams, Col. P. (Middlesbrough, E.)
James, Lieut.-Colonel Hon. Cuthbert Reid, D. D. Williams, Col. Sir R. (Dorset, W.)
Jameson, J. Gordon Remer, J. R. Wilson, Colonel Leslie O. (Reading)
Jephcott, A. R. Richardson, R. (Houghton-le-Spring) Wilson, W. Tyson (Westhoughton)
Jesson, C. Roberts, Frederick O. (W. Bromwich) Wood, Hon. Edward F. L. (Ripon)
Jodrell, Neville Paul Roberts, Rt. Hon. G. H. (Norwich) Wood, Major M. M. (Aberdeen, C.)
Jones, Sir Edgar R. (Merthyr Tydvil) Roberts, Sir S. (Sheffield, Ecclesall) Wood, Major S. Hill- (High Peak)
Jones, J. T. (Carmarthen, Llanelly) Robinson, S. (Brecon and Radnor) Woolcock, William James U.
Kelley, Major Fred (Rotherham) Robinson, Sir T. (Lanes., Stretford) Worsfold, Dr. T. Cato
King, Commander Henry Douglas Rodger, A. K. Worthington-Evans, Rt. Hon. Sir L.
Law, Rt. Hon. A. B. (Glasgow, C.) Rogers, Sir Hallewell Yeo, Sir Alfred William
Lawson, John J. Rose, Frank H. Young, Lieut.-Com. E. H. (Norwich)
Lewis, Rt. Hon. J. H. (Univ., Wales) Roundell, Colonel R. F.
Lewis, T. A. (Glam., Pontypridd) Royden, Sir Thomas TELLERS FOR THE NOES.—
Lindsay, William Arthur Rutherford, Sir W. W. (Edge Hill) Lord E. Talbot and Mr. James
Lloyd-Greame, Major P. Sanders, Colonel Sir Robert A. Parker.

Question put, and agreed to.


I beg to move, in paragraph (a),after the word "income" ["in respect of the first £2,000 of the income" ] to insert the words "after deduction of Income Tax."

We hear a tremendous lot of all the advantages which should be given to the working classes. We have heard to-night that some consideration should be given to the great middle classes, who are not represented in this House as many of us would wish. I maintain that a tax should not be charged on an amount that is not obtained. I will take the case of anyone having an income of £5,000. If you deduct Income Tax at 6s.in the £, it is a question of £1,500, and the net amount left is £3,500 My contention is that it is not fair or equitable or just that the Super-tax should be charged on an amount that is not obtained, and that, instead of being charged on £5,000, it should be charged on £3,500. If it were charged on that basis, there would he £500 at 1s. 6d., £500 at 2s., and £500 at 2s. 6d., making a total of £150, instead of £362 10s. If it be necessary to obtain the amount which the Government require, then let them put the tax fairly and squarely on the amount that is obtained, and not, having deducted first of all the Income Tax, say, "Although you have £3,500 per year, we consider that we should tax you on £5,000." Really, by the time it is done, the £5,000 comes to about £2,800 net. The right hon. Gentleman will recognise the responsibilities that are applicable to people with such incomes, and that the £2,800 does not amount to anything approaching its value in pre-War days.

The Super-tax presses very heavily on people with incomes of this amount, who have to provide for the proper education of their family, and to bear all the responsibilities and duties appertaining thereto, and I venture to hope, if my right hon. Friend cannot see his way entirely to remove this anomaly this year, he will meet it in some way by making some reduction.


I sat on the Royal Commission, and, although I did not sign the Report, I heard the discussion of this question. It is a question of Tweedledum and Tweedledee.


Does the hon. Member rise to second the Amendment?


No, Sir.


I beg to second the Amendment. It would be much more equitable to charge a higher Super-tax to bring in the necessary revenue than to charge a lower tax on a fictitious sum. It is absurd to charge Super-tax on a nominal income of £5,000 when the income actually received is £3,500. We would much rather be taxed on the income we receive at a higher rate, than at a lower rate on the income we do not receive.


It would perhaps be for the convenience of the House if the Chancellor could tell us how far he intends to proceed to-night with the Resolutions?


I would suggest that we should finish this Resolution dealing with Super-tax and the other Resolutions with regard to relief, and the Resolution with regard to double Income Tax within the Empire. If we finish these Resolutions that would enable us to begin with the Excess Profits Duty and, indeed, leave us nothing but the Excess Profits Duty and the Corporation Tax to-morrow. I would not ask the House to begin the consideration of those questions at this late hour, and I take it that the House would be willing to come to a decision on those two remaining questions, and if not completed to-morrow evening, when business is interrupted, then I should be obliged to resume on those Resolutions after eleven o'clock, so that we may finish to-morrow night. We can dispose of the Income Tax and Super-tax Resolutions down to the Excess Profits Duty this evening, and the Resolution which was taken on a different day for a general amendment of the law and on which no discussion arises at this stage. In courtesy to my hon. Friend (Sir H. Mackinder), if the House will allow me, I should like to conclude now and subsequently, by leave, reply on the Amendment.


I apologise for having forgotten the necessity of a Seconder. The point I desire to put is that, so far as the actual incidence of the tax is concerned, it really does not matter whether you pay a lower rate on a larger sum or a higher rate on a smaller sum. The sum total which the individual taxpayer will have to pay will work out the same. There is a practical point involved which is really of some importance, and it is this. The large incomes on which the Super-tax is raised involve very extensive consideration, both by the taxpayer and the Income Tax authorities and usually by the two in consultation. Those large incomes are considered continuously, that is to say, from year to year, you go on with certain understandings and the income is modified from year to year, as may be necessary under the circumstances, but a great deal is already understood, and has been settled between the surveyor or inspector of taxes and the taxpayer or his representative. If you change the standard rate of tax, say, from 6s. to 5s., what is the effect? If you raise your super-tax on the net income, that is, after deduction of Income Tax, then all your sums will be changed. You will have to alter the whole basis of your Super-tax, whereas if you keep to the realities, and impose your Super-tax on the total income which is due, you have no alteration to make in the complicated calculations which go on from year to year. You thus save an enormous amount of trouble and expense to the large taxpayer, who usually employs an accountant to make up his accounts, and you save taxation in order to pay the bureaucracy, that is to say, increased servants in the Inland Revenue. There-fore, while there is no actual injustice done, although there may seem to be, to those upon whom the tax falls, as a matter of fact there is a good deal of saving both to the individual and to the State by the method which is proposed by the Chancellor of the Exchequer.


I do not follow the statement of the hon. Member who has just sat down, who began by saying it made no difference whether you paid a higher rate on a lower sum or a lower rate on a higher sum. My experience of the Income Tax is that it is never reduced but always increases, and therefore that argument leaves me cold. In regard to the second argument, that you would inflict greater labour on the bureaucracy, that also leaves me cold. We have a very large number of people employed in Government offices, and here is something for them to do, and it is much better in their own interests that they should have something to do. Therefore I dismiss the arguments of the hon. Member opposite. Now I come to the sounder arguments of the Mover of the Amendment, who says it is very wrong that you should be charged a tax upon something you have not got. Let me point out to him that this is not the only occasion on which you are charged on something you have not got. The Treasury charged me last year Super-tax on £1,100 which I never had and which I never shall have, and I could not make my right hon. Friend the Chancellor of the Exchequer understand it, but he was kind enough to allow me to see one of the Revenue officials, and he understood it at once. My hon. Friend the Member for Oxford (Mr. Marriott) was with me at the time and will bear witness that at once the official said, "Yes, the Chancellor of the Exchequer"—fortunately he was not there—"is mistaken"—which was rather a strong thing for an official to say—"and you are right." Therefore there is nothing new in this; it is a habit the Treasury have got. If they can find something you have not got, they charge you Super-tax on it, and I suppose the Labour party will support that charge.

There are really only two courses open with regard to this Amendment. The first is to accept it, and that, I am afraid, my right hon. Friend will not do. The second is to do what I have constantly advocated, and that is, that if you will charge the Super-tax as if it were an Income Tax, make it Income Tax and charge it in one, and then everybody will know what is happening. Very few people know the amount that is paid in Income Tax and Super-tax. The general idea in the country is that people pay an Income Tax of 6s., and some very rich people pay Super-tax, and they do not realise the great sacrifice which a certain class of people is making at the present moment—a sacrifice which during the War they made without a murmer, but now that the War is over they naturally begin to think that, while they were willing during the War to bear an excessive burden and a greater burden than was borne by any other class, at any rate now they should be treated with some consideration. The only answer of the Chancellor of the Exchequer can be that Super-tax is part of the Income Tax, and as you charge Income Tax on the whole income, you must charge Super-tax on the whole income even before Income Tax is deducted. The simple way is to abolish Super-tax altogether, and to have a higher Income Tax at certain rates of income. I do not employ accountants, but I sit up late at night and then I make mistakes. A great part of that could be avoided. At the present day when we are governed by a democracy, and when vast numbers of electors do not pay anything at all, and the burdens are imposed on a small class, it is vital that they should know what that class is paying.


I have listened to three speeches at least of a remarkable character from the right hon. Baronet. In the first place, he wanted to get rid of the champagne tax; in the second place, he wanted to get the tax upon the separated incomes of the husband and wife, which is to get rid of part of the burden falling on the rich people. [HON. MEMBERS: "NO!"] I might have had some doubts as to the Vote which I have just given against the proposal which was made by the hon. Member for Wood Green (Mr. G. Locker-Lampson) but the last speech of the right hon. Baronet has convinced me that I and the Labour party do not need to be lectured by the right hon. Baronet or the hon. Member below the Gangway on the methods of taxation. Now that the burden has got to be borne, the right hon. Baronet, and those associated with him, do not desire to meet the liability; but want to bear as little a part as possible. [HON. MEMBERS: "NO!"] The only conclusion anyone can arrive at to-night, after listening to the speeches of the right hon. Baronet, is that that side of the House do not want to bear direct taxation upon themselves, but they want to transfer it to the working-classes of this country. [HON. MEMBERS: "No!"] The time has come when the financial burden has to be faced. During the War, when a levy was made, the rich classes, to their credit, gave up their sons. But they are not now prepared to give up their money. [HON. MEMBERS: "Oh!"] They gave up their sons, and are not now prepared to give up their money.


The hon. Member has forgotten the Amendment that we are now discussing—that Super-tax shall be charged after the deduction of the standard Income Tax.


Yes, the effect of which is that they will pay less upon £5,000.


What has that to do with their sons?


This is not Hyde Park.


I say the rich preferred to give their sons.


A very offensive observation.


Giving their sons has nothing whatever to do with the Amendment. Will the hon. Gentleman kindly confine himself to the question we are now discussing?


I will, Mr. Speaker. [HON.MEMBERS: "Divide, divide!"] We will divide when I have finished. The effect of this—[HON. MEMBERS: "Divide, divide!"]—I will wait—[HON. MEMBERS: "Divide, divide!"] I will stand my ground.[AN HON. MEMBER: "Apologise!"] For what? [AN HON. MEMBER: "Insulting remarks!"]


What for? For saying that we like our money better than our sons?


I have already invited the hon. Member to bring his mind to bear upon the particular Amendment before us.


If my remark was offensive to the House, I will willingly withdraw it. [HON. MEMBERS: "Hear, hear!"] But it does seem to me that now the time has come for payment, you are trying to evade your obligations. [HON. MEMBERS: "No!"] You are not setting a very good example in seeking to get rid of the champagne tax. You were trying to get rid of the burden falling jointly on man and wife. Now you are seeking to get rid of your further financial obligation. If this burden is not borne by those rich enough to bear it, it will naturally fall upon those less capable. It is because this Budget seems framed to impose a burden upon the less capable; because it is suggested we should derive the greater share from the Excess Profits Tax and other similar taxes, which, in my opinion, are indirect taxation, that I am opposed to the Amendment. If it is pressed to a Division, I shall support the Government.

11.0 P.M.


I regret that the hon. Member who has just spoken (Mr. Spencer) has misunderstood the Amendment and has made observations which are resented in every part of the House. I ought to apologise for standing any further between the Chancellor of the Exchequer and the right hon. Gentleman the Member for the City of London (Sir F. Banbury).We have it, on the authority of the right hon. Baronet, that the Chancellor of the Exchequer finds it difficult to understand and appreciate his arguments, and no doubt he would like to reply while those arguments are fresh in his mind. I think the general argument of the hon. and gallant Gentleman who moved this Amendment is something that must carry general assent. There is no suggestion in the Amendment of the wealthy classes seeking to evade any just method of taxation, and it is purely a question of what is the best method by which that taxation should be levied Whether the case made out by the mover of the Amendment is likely to influence the Chancellor of the Exchequer is one upon which I have my doubts, but I am not without hope. On the strength of the right hon. Gentleman's speech I was moved to vote in one of the most critical divisions of the Session relating to the married Women's Income Tax, and I induced many of my hon. Friends to vote with the Government, because I was moved by the right hon. Gentleman's exposition of the great principle of taxation according to the ability to pay. I want to apply that prin- ciple to the class for which I am pleading, namely, the agricultural landowner.

The general case of levying Super-tax on what you have already paid Income Tax upon is one that has been argued on its general merits, but the case of the agricultural landowner is not quite on all fours. Over and above what is deducted by way of Income Tax before the Supertax is levied, what I may call the nominal income is very much smaller than the nominal income of the professional classes. Therefore there is a special claim for the consideration of their case This is not the moment to press the point, but I want the Chancellor of the Exchequer to bear in mind before he replies that there is a very strong argument that may be advanced from another point of view which lends support to the case which has been made out by the hon. Member who moved this Amendment.


I would like the Chancellor of the Exchequer to tell us whether, having regard to the conflict of interests involved, the Government will take their Whips off in the Division to-morrow on the Excess Profits Tax? I wish to express my regret at the speech we have just had from the Labour Benches. The hon. Member (Mr. Spencer) has tried to foster hatred even on the question of taxation. The speeches one hears and the propositions now brought forward from day to day make us strange bed-fellows. At one minute one is in the Lobby supporting a Labour Motion, the next time one is supporting the Government. There is a good deal in what has been said by the right hon. Baronet the Member for the City of London, in his suggestion that the Chancellor of the Exchequer should make capitalists more popular by showing in spectacular figures the enormous amount of taxation capital is paying.


There is always a good deal in what I say.


Joking aside, there is a great deal in bringing home to the poorer classes the amount of taxation which is levied on the more wealthy classes in this country. I do not put this suggestion forward as a means for relieving them of any part of their taxation. But I for one will never come within the £5,000 range of Super-tax. After all, a man with £5,000 income is not so much better off than a man with a smaller income. These incomes carry with them great responsibilities, and there are many men, both in and outside this House, who find they are merely guardians of the income which is distributed, to a very large extent, among the working clasess. Take the landowners and those especially who keep up large estates. If one goes through their books it will be found that the greater part of the income is paid out in keeping working-class people in positions of comfort and in realising the obligations which exist between capital and labour, and in paying fair and reasonable wages, and when it comes to the bitter end, they have to sit up at night with towels round their heads trying to make the two ends meet. I know that many members of the Labour party feel that unless they had capitalists in this House they would lose a good deal of their stock-in-trade when they go to the constituencies. I am tired of hearing political powder and shot used in this way by one party towards another. The last speech from the Labour Benches would have been better addressed to a Hyde Park audience than to Parliament. To say that capitalists gave their sons but would not give their money—


I hope the hon. Member will not return to that subject which is now closed.


I will refrain from addressing myself to it any further. I will simply say that I hope the Chancellor of the Exchequer in his reply will do two things which he has been asked to do—one by the capitalists and the other by Labour speakers. I hope he will make the tax that is payable by capital understood by the non-capitalist class, that he will make it perfectly clear that a proportion of the tax which he is now imposing will first of all tend to defeat class hatred such as has been evidenced and that it will further tend to abolish at least some of that huge bureaucratic Department which the Government are now setting up to collect their taxation.


The most remarkable thing about this Debate is the extent to which the speeches have strained the proposals of my hon. and gallant Friend (Sir F. Hall) who Moved this Amendment. I must thank my right hon. Friend, the Member for the City of London (Sir F. Banbury), for the hand-some tribute which he paid to the much abused Civil Service. He stated, quite truly, that he spent a good deal of time last year in trying to explain to me a case of injustice within his personal knowledge, which I failed to understand. That is not peculiar to me. My right hon. Friend, as he stated in the Debate immediately preceding this, entirely failed to follow my arguments. The Civil Service is superior to us both. They understood my right hon. Friend, whom I could not follow, and they understood me, whom he could not follow.

My right hon. Friend did not really support the Amendment before the House. He gave it a perfunctory blessing. He said, "If, as I suppose, you cannot do that, do something totally different." What he asked me to do was to charge Super-tax and Income Tax as one. What does he mean by that? Super-tax and Income Tax is proposed in the Budget, at the highest rates, are 6s. in the £ for Income Tax and 6s. in the £ for Super-tax. Am I to deduct tax at the source at the rate of 12s. in the £ from the income of everyone throughout the country?


I said graduation. As graduation is now in existence, it would be perfectly easy to graduate, in the case of larger incomes, by putting the Income Tax and Super-tax together and distributing that in stages, as is done now with the Income Tax and Super-tax separately.


My right hon. Friend must surely see that that carries him no further for the purpose which he has in view than our present arrangement, when we publish from time to time a White Paper showing, in respect of all the steps of income, what is the combined effect of Income Tax and Super-tax. To talk of levying the two in one is to talk of an impossibility. No Minister could come and propose to the House to deduct Income Tax at the source at the rate of 12s. in the £, and to return money on all but the highest class of incomes. It is perfectly impracticable, and if it were practicable, it would add heaven knows how many to the Civil Service, who understand my right hon. Friend so well, but of whose existence he is so impatient.

With regard to the actual proposals of my hon. and gallant Friend (Sir F. Hall), he does not propose that any Super-tax payer should pay less than he does now. What he proposes is that you should, before charging Super-tax, allow him to deduct from his income his Income Tax, and that then you should charge upon the balance such an increased rate as will obtain the same amount that you now get by charging on the original income. In that case no taxpayer gets any relief, but the only result of that is that, without bringing relief to anyone, because you do not want to bring relief for the sake of a change in the form of your taxation without any change in its reality. You increase the labour of the taxpayer and of the tax levier. You put increased trouble on the taxpayer to make out his return and increased cost, and you require an increased staff for the Inland Revenue in order to levy the tax. It would have been quite wrong at the inception of this tax to pass it on the principle proposed by my hon. and gallant Friend. When it has been at work for several years, when the change which he proposes would not affect the burden upon a single man or woman throughout the country, is it worth while to upset your whole system, which by this time everyone is subject to?


Surely, if you charge on the net amount instead of the gross amount, the taxpayer would get some advantage?


Oh, yes. That was the proposal of my hon. and gallant Friend, but all of his supporters have repudiated the intention of bringing relief to the Super-tax payer. My hon. and gallant Friend stands alone if his purpose in this Amendment is to relieve every Super-tax payer of part of the Super-tax to which he is now liable. No one speaker has given him any support. Of course if you allow him to make a deduction and charge a tax at the same rate you give him relief, but the proposition normally expressed by every other speaker was that you were to increase the rate so that you got the same amount. That being so, it is not worth while to disturb the whole system with real inconvenience to the taxpayer and the revenue for the sake of a change from which no one derives anything but a purely sentimental satisfaction.


I should like to place before the House one instance in which, in my opinion, injustice is done by the existing system of levying Super-tax. I refer to the case of a retired officer on a pension which may be £200, £300 or £400 a year. In the case of a colonel it is £420 a year. The proposal of the Mover of the Amendment is that Super-tax should be levied upon the net income after deduction of Income Tax, and not upon the gross income before the deduction of Income Tax. A retired officer has served perhaps a great many years under the promise of a pension colonel who retires on a pension of £420, and whose private income obliges him to pay, the standard rate of Income Tax, receives on account of his pension, not the £420 promised him, but £298 a year. The sum of £420 he has to add to his other income for computation of Super-tax. I submit that is an injustice, because not only is he called upon to pay Super-tax upon income which he never receives, but the mere fact of his having earned a pension will often lift him into a higher rate of Income Tax or Super-tax. This is a concrete case which ought to bring home to hon. Members the great injustice which is imposed upon retired officers, and I dare say upon other people who are in the same position, by the present system of assessing Super-tax.

Question, "That those words be there inserted," put, and negatived.

Remaining Resolutions to be considered To-morrow: