§ 79. Sir J. BUTCHERasked the Chancellor of the Exchequer whether, in the case of income arising from foreign investments to which residents in this country are entitled, Income Tax in this country is assessed on the income arising from such investments after deducting there-from the foreign taxes thereon; and whether the Report of the Income Tax Commission recommends that this practice should be continued.
§ Mr. BALDWINThe proposal which the Royal Commission on the Income Tax has put forward, and which the Government has adopted, for dealing with the problem of double Income Tax within the British Empire, contemplates that where income is taxed twice in the Empire the lower of the two taxes shall be remitted. A necessary corollary to this proposal for the elimination of double taxation is that the United Kingdom Income Tax on income derived from a Dominion shall be based, not as at present on the amount of the income, less the Dominion tax paid thereon, but on the full income without such deduction. In computing, for the purposes of United Kingdom Income Tax, the amount of income arising abroad outside the Empire, the deduction in respect of taxes paid in the place where the income has arisen will continue to be allowed. The Royal Commission does not recommend any change in the existing situation as to double taxation, so far as foreign States are concerned.
§ Sir J. BUTCHERIs my hon Friend aware that, possibly owing to my misfortune, he has entirely misapprehended the nature of my question, which dealt, not with investments in our dominions, but with foreign investments, such as investments in America?
§ Mr. BALDWINThat was answered in the latter part of the reply.
§ Sir J. BUTCHERDo I understand that in taxing the income from foreign investments, the foreign tax is not deducted before imposing the tax chargeable by this country?
§ Mr. BALDWINPerhaps my hon. and learned Friend will be good enough to read the reply.