- (1) The claimant, if he proves that for the year of assessment he has a wife living with him, shall be entitled to a deduction of two hundred and twenty-five pounds, and in any other case to a deduction of one hundred and thirty-five pounds.
- (2) If the total income of the claimant includes any earned income of his wife the deduction to be allowed under this Section shall be increased by an amount equal to nine-tenths of the amount of that earned income, but not exceeding in any case forty-five pounds.
§ The CHAIRMANThere is a number of rather complicated Amendments relating to this and the next four or five Clauses, which, to some extent, overlap one another. It is my desire that there should be an opportunity for every hon. Member to raise any point that he wishes, but, if I am to do that, I shall require the assistance of hon. Members in maintaining a business-like discussion, so that I do not pass anything over.
§ Mr. D. M. COWANI beg to move, in Sub-section (1), to leave out the words "if he proves that for the year of assessment he has a wife living with him."
There are two Amendments standing in my name, and those two are comple- 1490 mentary. Neither is of any significance in itself, but, read together, the two Amendments make a very considerable, and what might be described as a drastic, change in the Clause. If the Amendments be accepted, the Clause will read:
The claimant shall be entitled to a deduction of two hundred and twenty-five pounds.I might explain that I have been asked to put this Amendment forward by a very large number of persons who are affected by the Clause, and, as I considered that it was a matter which should be decided upon the floor of the House, I agreed to do so. It is quite true, with regard to many Income Tax arrangements, that we may be referred to the Report of the Royal Commission, but many people in the country who are affected have no opportunity of studying or even of understanding those Reports, and in a matter of this sort people are entitled to have an authoritative statement on the floor of the House. I am quite sure that the Chancellor of the Exchequer will not take it amiss that we should bring this matter forward. Together with every other Member of the Committee, I recognise, not only the great ability which he brings to the discharge of his duties, but also the unfailing courtesy and magnanimity which he shows to all, even to those who differ from him. This Amendment, combined with the next, cuts fairly deep. I take it that marriage in itself is not a matter which should be the subject of any financial abatement. I would like, at the same time, however, to make it clear that those for whom I speak and myself are completely in accord with all abatements in regard to children. Personally, I think we are really moving towards a method of making some direct provision for children, and this abatement in respect of children is really a further step towards that more complete method.The abatement for marriage is a fairly recent thing in our fiscal system, but since its introduction it has been growing, and it is but right that the Committee and the country should consider where they are going in this matter. I would call attention to a proposal that was made with regard to France. It was that if there were no family after two years of marriage the couple should pay 10 per cent. more Income Tax Hon. Members may laugh at the proposal. It may or it 1491 may not suit France, but I am perfectly certain that it is not one which we should wish to see introduced into this country. Now is the time that we should consider where we are moving with regard to the Income Tax. Abatement with regard to married people may be urged on one or other of two grounds. First, that it will encourage marriage, and, secondly, that the cost for a single person is less than for a married person. On both of those grounds, I think this measure fails. I am sorry the right hon. Member for Peebles (Sir D. Maclean) is not here just now, because, in a discussion in this House some time ago, he said that for himself he would tax bachelors out of existence. We understand, of course, the spirit in which the right hon. Member for Peebles said that, because we cannot think of the right hon. Gentleman as saying anything which was not really meant for some one's good, but at the same time he would render a poor service to the world if he were to tax bachelors out of existence. He would destroy much that is best in literature, in poetry, in drama, and in art, and I am quite sure the person who would seriously propose to abolish bachelor uncles and spinster aunts would bring down upon himself the displeasure of all nephews and nieces. The right hon. Member for Peebles should pity those who lack those graces of mind and person which commend themselves to the opposite sex, and might have had some sympathy with those who have to say with Sir Galahad:
I never felt the kiss of love, Or maiden's hand in mine.Before passing from the right hon. Gentleman the Member for Peebles, I would suggest that he should not give people the idea that celibacy is something worth paying for. If he were to put marriage under the luxury tax lie might be more successful in getting the people to marry. If I may refer to the Financial Secretary to the Treasury, I would recall to his mind a statement which I think he made some time ago with regard to marriage. He said that all the best men either married or wished to marry. There is a particular pathos about that qualification "wished to marry," but if that is one of the grounds on which this penalising of bachelorhood is based, not an inconsiderable number 1492 of other men than the good men marry, to judge from the various courts before which they appear from time to time, and I would point out also that most of the saints, both men and women, have been celibate, and that even St. Benedict himself was a celibate.With regard to the second ground, namely, that it is less expensive for a bachelor or spinster to live in a corresponding position of life than it is for a married person, I think all the facts go to contradict that. With regard to lodging and clothing, if anything, the balance is certainly against this principle. Then there are many exceptional cases which are not met by abatement. I have received from my own constituents letters telling me of invalid bachelors who have to keep nurse housekeepers, and among my constituents are many spinsters who require help, and should not be penalised as against married people. It is said that hard cases make bad law, but that seems to be an inverted truth, and that it is bad law that makes hard cases, and we ought not to allow anything in our fiscal system or in any other way to penalise those who do not deserve to be penalised. But there is, I think, a special class deserving consideration. This class includes both men and women. What of the men who were taken for the War, many of them because they were unmarried? The country in its hour of need called first upon the unmarried men, and by doing so we have to recognise a special responsibility towards them. Many of these men are back, it may be, beyond the possibility of marriage, and certainly with regard to those there ought to be some reasonable allowance made.
Then, again, I would call attention to the fact that, owing to the War, there are in this country at the present time tens of thousands of women who never can be married. They have given the best to their country. They had marriage before them, but they lost all, and gave everything they had for their country's sake. I think it is very hard indeed that there should be anything in our financial provisions that would make any discrimination against those people. I have three examples which seem to me to typify the whole case. I take the case of a girl who was married, and whose husband, an officer, was killed. She received a pension. I take the case of another girl of equal age, a com- 1493 panion of the first, who was engaged to an officer and was about to be married, but he was killed before the marriage. She receives no pension. Not only that, but she is penalised if this Clause remains as it stands now. The third case is that of another young woman—a companion of the other two—who married a man who was exempt from the War, who had no anxiety of any kind, and is now in a preferential position. I think that these are matters which we ought to consider in this House. It is sometimes looked upon from rather a humorous point of view, but I can assure the Committee that this differentiation is creating a feeling of bitterness in the hearts of many in this country, and if any time were appropriate for the reconsideration of this matter, I should say it is now. Many of us regret that some time ago the Chancellor of the Exchequer found himself unable to tax war wealth. Are we then at this moment, while allowing hundreds of millions of war wealth to escape, which we believe should come into the coffers of the State, to take some trifling sum, especially from women, many of whom have a dreary present, and nothing to which to look forward but a dreary future. I would, therefore, ask the Chancellor of the Exchequer and Members of this Committee to give to this Amendment at least a sympathetic consideration, in order that those who are affected may know exactly the ground upon which the decision has been come to.
Mr. CHAMBERLAINMay I be allowed, in a sentence, to acknowledge the kindly reference to myself which my hon. Friend made in the opening sentences of his speech? My hon. Friend's whole case illustrates a difficulty with which, I think, in the general experience, human nature is not infrequently confronted. It merely comes to this, that if you show consideration to one party, it is always alleged that you are doing an injustice to another. My hon. Friend's whole argument proceeds upon an assumption, which is not the assumption upon which the recommendations of the Royal Commission was founded, or upon which this Bill is based. It proceeds upon the assumption that any differentiation between married and single people is a penalty, or is intended as a penalty, on 1494 a single life. That is not so. The differentiation is intended, not as any penalty or reflection on the bachelor or spinster, with whom those of us who are married men will have unlimited sympathy, but as a consideration for the obligations which are incumbent upon married couples. If a man and woman join in matrimony and live together, they are, for the purpose of the tax which we are considering, aggregated for the purpose of ascertaining the rate at which they should pay tax, yet two of them, being dependent upon the income, the strain upon the income is greater than if they were only one. We, therefore, make a recognition of that in giving an exemption on account of the second person, who is interested in the income, as well as the exemption which is common to everybody, whether single or married, of income practically below £150. What my hon. Friend proposes is that there should be no such recognition of the fact that in these cases of married couples living together, there are two people necessarily dependent upon the income, and that the income, on which the rate by which they are assessed is fixed, is the joint income of two people, and not the single income of a single individual.
In fact, my hon. Friend asks the Commitee to say that marriage, with its obligations, should receive no consideration. He asks us to reverse the process which the whole House pressed upon me last year. I think, without exception, last year there was a feeling in this House that, whatever our general views about the Income Tax, about the limit of exemption or abatement, there was a general feeling that the responsibilities of married couples were not sufficiently recognised. What we say in this case is that a single man is exempt from tax, if his total income is below £150, but for a married couple an additional £100 is allowed before they become subject to the tax. I do not think that is too much for the responsibility which marriage involves. I quite agree there are individual bachelors who have obligations, not perhaps in law as binding on them, not perhaps morally as binding as the obligations of husband and wife. You cannot deal in a taxation statute or any statute with every variety of circumstances which exists throughout the land. All you can do is to proceed upon broad principles, and, broadly speaking, 1495 married couples have greater obligations than single persons.
§ Amendment negatived.
§ Mr. BILLINGI beg to move, in Subsection (1), to leave out "a" ["has a wife living with him"], and to insert instead thereof the word "his."
This might be considered a mere drafting Amendment, but I think on second consideration it will be found that it is not so.
§ Mr. BILLINGAfter all, this Amendment is one of some substance. The right hon. Gentleman pointed out in his speech that there were hard cases. I am not quite sure whether this is one of the kind he intended. Are we to understand that the Clause, when it speaks of a claimant having a wife living with him, refers to "his" wife, and not to "a" wife?
Mr. CHAMBERLAINSurely, that is the interpretation! A wife has always been interpreted by the courts, and everybody else, as being the wife of the man referred to. But if it would be any satisfaction to my hon. Friend to say "his" wife, which is quite clearly the intention of the Bill as it stands, I shall be glad to accept the alteration.
§ Amendment agreed to.
§ The CHAIRMANWe now come to a series of three Amendments dealing with the same point. The one stands in the name of the hon. Member for Twickenham (Sir W. Joynson-Hicks), the other in that of the hon. Member for Wood Green (Mr. G. Locker-Lampson), and the third in the names of the hon. Member for Govan (Mr. N. Maclean) and the hon. Member for Pontypool (Mr. T. Griffiths). I therefore propose to select the one that gives the wider scope for discussion.
§ Mr. T. GRIFFITHSI beg to move, in Sub-section (1), after the word "him" ["a wife living with him"] to insert the words" or wholly maintained by him."
We want to know from the Chancellor of the Exchequer whether, supposing a man has a wife, say, in the asylum, he is going to receive the benefit of this Clause. supposing, too, that the wife has been 1496 separated from her husband, will he still be included in the Clause? Again, a man and his wife, as in many cases, may be separated as the result of mutual agreement. What about that case?
Mr. CHAMBERLAINProbably the explanation that I shall make will satisfy the Mover and supporters of the Amendment. There are cases when a married couple are only temporarily separated, where the husband is abroad for a cure, or for business, and so their residence is compulsorily apart. There is also the case put by the hon. Member where the wife may be confined in an asylum. In all such cases the personal allowance would be granted in continuation of the practice pursued in relation to the old allowance of the wife. Then you have cases where the husband and wife are living apart by mutual agreement or as the result of judicial separation under an order by a competent authority. In such cases I do not think there is really any ground for granting the husband the allowance of £225 applicable to the ordinary case, because, generally speaking, he is not being called upon to bear Income Tax in respect of that part of the income he pays in support of his wife. For instance, where the husband constitutes a charge upon his income in favour of his wife he is entitled to deduct Income Tax from the payment, and consequently bears tax only on the balance of the income which is strictly his own.
§ Sir E. CARSONIs that on the Statute Book, or how does it arise?
Mr. CHAMBERLAINI think it follows from the Statute. I will not, however, dispute with my right hon. and learned Friend on a point of law; but it is certainly the practice.
§ Mr. PRETYMANIs the income still aggregated even when they are living apart. [HON. MEMBERS: No."] I think it is aggregated if they are not divorced, but merely not living in the same house. That is the main reason the allowance is given.
Mr. CHAMBERLAINMy right hon. and learned Friend who first questioned me has the advantage of being a lawyer, and the hon. Gentleman who subsequently put a question tome (Mr. R. McNeill) had the advantage of being a Member of the Royal Commission which went fully into 1497 this. My information, however, is that in cases where the two are living apart by mutual agreement or where there is a judicial separation under an order, the husband would, generally speaking, not be called upon to bear Income Tax on that part of his income which he has to pay in support of his wife.
§ Sir E. CARSONWhat is the Statute?
§ Sir E. CARSONI do not profess to know all Acts of Parliament.
Mr. CHAMBERLAINNor I. For example, where the husband constitutes a charge on his income in favour of his wife on separation he is entitled to deduct the Income Tax and pays only upon the balance of the income which he has for himself. Where the parties are permanently separated the wife is regarded as a separate individual for Income Tax purposes. She can claim the personal allowance of £135 applicable to an individual, and also any other allowance to which she my be entitled in respect of her income. If any of the three Amendments were adopted the husband would be entitled to the personal allowance of £225 applicable to a married couple, while, in addition, the wife would be able to claim the separate allowance of £135. The effect would be that a married couple living apart would receive more favourable terms than a married couple living together. I am quite sure that is not the intention of my right hon. and learned Friend and others. If, however, that explanation does not meet the whole case I shall be glad to have these various points put together, and will look into them further between now and the Report stage.
§ Mr. HOLMESI think the Amendment is met by the existing practice, except in regard to a permanent separation. The case the Chancellor has cited of a couple separated by agreement, or order of the court, is a case that comes under the ordinary Income Tax law, like the cases of paying interest on dividends or annual payments. What the Chancellor is really saying is that if a man hands over to his wife a separation allowance of £70 a year she has to believe in her own mind that she is really receiving £100. She would 1498 never look at it from that point of view. I quite agree with the Chancellor that that point is met. An agreement to separate, and also the case of a husband whose wife is in the asylum, are completely covered by the existing practice of the Inland Revenue Authorities. The only thing for the Committee to consider is where the husband and wife are permanently separated, and whether they should be allowed to be treated as if married, and the full allowance for married people given to them.
§ Mr. RONALD McNEILLI do not understand the action of the Commissioners of Inland Revenue, or what the right hon. Gentleman tells us is the law. I myself know the case of a couple who, are separated by deed, or, at any rate, by agreement, and where the wife, living apart from her husband, has a very small income of her own, partly derived from the allowance of her husband and partly from investments of her own. I know that when application has been made on her behalf for the remission of Income Tax on the score that her income was below the limit, the Inland Revenue Authorities have refused to consider the case unless and until she says what is her husband's combined income. They have most consistently refused to consider the case. The woman I have in my mind has no means of ascertaining what is her husband's income, and therefore she has been for years past deprived of the right she would otherwise have of the return of Income Tax. That case appears to me to be met by the Amendment. There is a stronger case. There are many cases where couples may be living apart without any actual legal agreement or deed, but by mutual consent, and where the husband makes a voluntary allowance. This may be null in law. It is a verbal allowance to his wife. He says: "I agree to pay my wife £200 a year," or whatever it may be. That surely, for Income Tax purposes, remains part of his income? These are cases which this Amendment is intended to touch, as I understand it. My right hon. Friend says they are already covered and protection given. If so, that protection is certainly not granted by the action of the Commissioners.
Mr. CHAMBERLAINIn answer to several queries, I may say the income is only aggregated where the couple are 1499 living together. My hon. Friend says he knows cases of separated couples where the revenue authorities aggregate the income for the purposes of the charge. I wish he would give me particulars in order that I may investigate the matter. Only the incomes of married people who live together are aggregated, and if they are not living together their incomes are not aggregated. Where a person makes a voluntary allowance to anyone it still remains part of his income for the purpose of taxation. I shall, however, be very glad to look into this matter. There appears to be a conflict of opinion as to the treatment in the case to which the hon. Member has referred and what I am advised is the law.
§ Sir W. JOYNSON-HICKSI should like to explain why I put my Amendment on the Paper. I cannot understand the Chancellor's statement. I did not put my Amendment down to deal with aggregation at all. It was intended to deal with a case of a man who has a wife in a lunatic asylum. I wrote to my right hon. Friend about a very sad case and I gave him the name and address of the person. In this case the man had a very small income and his wife was in a lunatic asylum. I asked if some allowance could not be made of the amount the husband expended on his wife in the asylum and my right hon. Friend said it was quite impossible.
Mr. CHAMBERLAINI said that he would be entitled to the personal allowance of £225, but not to the expenses of maintaining his wife in a hospital or asylum any more than he would be entitled for an allowance in regard to the expenses of maintaining his wife in his own home. He would be entitled to the deduction of the personal allowance.
§ Sir W. JOYNSON-HICKSI think the husband who has a wife in an asylum should be entitled to the same allowance as if he has his wife living at home. I am sorry that I have not brought the letter down to which I have referred, but the right hon. Gentleman wrote to me exactly the contrary to what he has just said. I understood that in order to get the married persons allowance the husband and wife must be living under the same roof, and I put down an Amendment to over the case about which I wrote to the right hon. Gentleman.
Mr. CHAMBERLAINIf the Committee will allow me, I will reconsider this matter between now and the Report Stage. I cannot pretend to have a direct personal knowledge of all these matters or carry them in my head, and there appears to be some misapprehension which I am afraid I cannot clear up now. If hon. Members will allow me, I shall be glad to look into the matter between now and the Report Stage.
§ Sir E. CARSONAs my right hon Friend is going to look into this matter, may I suggest that where these questions arise it is not satisfactory to settle the matter on the practice of the office. Where there is any difficulty it should be put in the Act of Parliament, and it should not be left open to anyone to say, "Our practice is not so and so." All taxation should be done by Act of Parliament, and I suggest to my right hon. Friend that he ought really to consider whether the Amendment before the Committee is a reasonable and proper one to have in black and white as a direction to the Commissioners. I am not sure whether I understood my right hon. Friend rightly, but he certainly astonished me when he said that if a man and his wife were living apart, and a man was making an allowance, whether voluntarily or under an order, he could deduct that from his income. That seems to me to be an extraordinary statement, and I do not know under what statute that can be done. I cannot see why, if you can do it in relation to a wife, you should not do it in relation to children or anybody else. They might say, "Here is a charge put upon my property and I am going to deduct it and not pay Income Tax on it." I feel sure that there must be some mistake in the information which has been given to my right hon. Friend.
§ Sir F. BANBURYI want to raise the same point which has just been raised by my right hon. Friend and the hon. Gentleman opposite, who appear to have some knowledge of the practice in this matter. To say that it is the practice of the Department to do certain things is an entirely wrong thing. I am afraid it is rather the practice of the Inland Revenue to make a law unto themselves and to say, "We will do so-and-so," or something else, quite irrespective of whether or not the proposal which they 1501 are prepared to sanction is laid down by Statute. There should not be any attempt on the part of any Government Department to make a law unto themselves. They should only act according to the law as made by Parliament and in no other way. This point is important, not only with regard to the Inland Revenue, but also as applied to Government Departments. I hope the Committee will thoroughly consider this matter before they accept a proposal that it should be reconsidered on Report.
What would be the effect of this Amendment? A man has relations with another woman not his wife, and his wife finds it out. She says, "I will not get a divorce because it is not coupled with cruelty. I have an allowance and I will live by myself, and you can live with this woman who is not your wife. "Under the Amendment this man would be entitled to a deduction, as far as I can make out, of£250, and he would escape the Income Tax altogether, and this on the ground that he was doing some good to the State by having married and having children, whereas, as a matter of fact, he was living in adultery with another woman, connived at by his wife and, possibly, by himself.
I was speaking yesterday upon the question of these allowances, and the Chancellor of the Exchequer said that Clause 15 was not a convenient Clause on which to discuss this matter, and that it could be considered later. I do not want to raise the whole question now. I intend to raise it on the question, "That this Clause stand part of the Bill," and I will not say anything upon the general question now as to whether these deductions should or should not be made. I earnestly trust that an Amendment of this sort, which might lead to all sorts of abuses, will not be carried, and I hope the suggestion made by my hon. Friend opposite (Sir W. Joynson-Hicks) will not be agreed to. Why should a man, because unfortunately he happens to have his wife in an asylum, be exempt? He has to pay to support his wife whether she is living at home or not. I object to all these attempts on the part of individuals to escape their just obligations to the State.
§ Sir W. JOYNSON-HICKSIt is admitted that if a husband and his wife are living together a certain allowance is 1502 given to the husband, but where the husband pays for the maintenance of his wife in a lunatic asylum, all I ask is that the same allowance should be made to the husband as if she were living at home, and I do not think that is unreasonable.
§ Sir F. BANBURYThat is a different thing altogether. Where, through no fault of the husband or the wife, a separation occurs, I think the allowance should be made. That is a different thing altogether. May I make a suggestion not in a hostile spirit. We are now in a difficult position, because we have not got legal advice on this point. I think we ought to insist on the presence of one of the law officers in a Debate like this. We have two law officers, but we never see them here, and upon a very intricate matter like this surely one of them might attend for a few hours on two or three days when matters of this kind are being discussed. I hope the Financial Secretary will represent to the law officers that we shall be glad to have them with us on these occasions.
§ Sir J. BUTCHERI wish to say a word or two upon the very important question which has been raised by my right hon. Friend the Member for Duncairn (Sir E. Carson). It is exceedingly important in a taxing Act that the practice of the Department should be strictly in accordance with the letter of the law. Otherwise the person taxed does not know what his rights really are. The Chancellor of the Exchequer told us that in this case the practice of the Department is at variance with the words of the Act, which lay down that if a man has his wife living with him he should be allowed a deduction of £225 a year. It is contended that if a man and his wife are not living together, and the wife is in a lunatic asylum, he should be entitled to the same allowance. There is a great deal to be said for the view which the hon. Member has put forward, but I hope that between this and the Report stage, in the matter of these deductions, the Chancellor of the Exchequer will consult not only the officials of his Department, but also the Law Officers, and bring the words of the Act into strict accordance with the practice of the Department, and then we shall be able to discuss whether the new words the right hon. Gentleman proposes to introduce are correct or not.
§ 5.0 P. M.
§ Mr. GRIFFITHSI agree to the suggestion of the Chancellor of the Exchequer. I would like to point out to the right hon. Member for the City of London (Sir F. Banbury) that this Amendment is based on a standard of justice. It does not matter whether a man maintains his wife at home or under a judicial separation; he still has to maintain her. However, I am willing that the matter shall stand over until the Report stage. I submit that it is a reasonable Amendment, which would do away with many complications if put into the Act in a proper form.
§ Amendment, by leave, withdrawn.
§ Mr. LAWSONI beg to move, in Subsection (1), after the word "him" ["living with him"], to insert the words "or is a householder and is maintaining his mother."
The effect of these words, if included, would be to put a young man who is maintaining his mother in exactly the same position as a man maintaining his wife. Clause by Clause we discuss these Finance Bills, and on every possible occasion we have the widow and orphan turning up to strengthen our arguments on particular points. I think hon. Members should feel under a debt of obligation because, in this case, we have the real article to deal with. We cannot see why when a husband dies and his family lose his wages or whatever income he may have that family should not only suffer that loss, but should also be refused the consideration for Income Tax purposes which the father formerly received. Neither can we see why, for instance, if a man dies this year he receives consideration to the extent set down here—£225, and next year, when his son takes his place and has to maintain the mother, the son loses that consideration. We cannot see why the family's loss should be the Exchequer's gain. There are other reasons—based on common sense and justice—;which make us hold that this is a sound Amendment. Certainly there is considerable feeling in the country on this question. There is a good deal to be said on the ground of sentiment, and there is a very strong case indeed here for the Amendment. Each one of us must know of cases where a father has died and a son has stepped into the breach to maintain his mother. Sometimes it has 1504 been a long-drawn out silent battle with adversity. Very often it is in a spirit of courage and chivalry that a young man faces this situation. In many cases the young man is deprived of the opportunity of marriage because of his loyalty to his mother. Altogether we think there are very real reasons for accepting this. Amendment, and I repeat we do not understand why the Exchequer should gain as a result of the family's adversity. Young men who accept obligations of this nature—there are some who do not—are the type of men who ought to be encouraged, and we move this Amendment in order to place the single young man maintaining his mother in exactly the same position as a married man maintaining his wife. The effect would be that instead of getting a personal allowance of £45 this young man would get the same allowance as a married man—namely, £225.
§ Mr. BALDWINMy hon. Friend who has moved this Amendment has a very clear logical mind, but I doubt whether he sees where it carries him this afternoon. He spoke of the Exchequer reaping a profit out of domestic trouble. I think I shall be able to show that that is not the case here. If I may say so, there appears to be some confusion in the mind of my hon. Friend. Let me try and explain this allowance as I conceive it. The allowance to the married man is one thing, the allowance to the single man is another. These stand by themselves as individual allowances. In addition to these allowances there are other allowances of a comparatively small nature for dependents—for the mother and children and so forth—but they are an entirely distinct class of allowances to the two individual allowances paid to the individual taxpayer in assessing, under the new rules, his taxable income. The allowance in respect of the mother may be £45 or £25, according to the circumstances, but there is no comparable relation between the allowance to the mother and the individual allowances to which I have referred. There is no reason why a man should have the dependent allowance for the mother either increased or decreased merely because of the fact that he happens to be married or single, and the practical effect of my hon. Friend's resolution, if carried, would be very peculiar. It would add £90 per year to the amount of relief given to the 1505 single man in respect of his mother over and above that given to the married man in respect of his mother. That is an entirely illogical position, and I am afraid we cannot see our way at this point to disturb the deduction which we have allowed for the mother, whether it be £45 or £25. I am quite sure if my hon. Friend with his clear mind keeps it clearly in view that there is no relation between the individual allowances and the allowances given to dependents, he will see that, although his proposal would be a very great concession to one individual in one set of circumstances, it is one he can hardly expect us to accede to.
§ Mr. PRETYMANI think the strongest argument against giving the same allowance to the single man maintaining his mother as to the man maintaining his wife is that there is no aggregation in that case. The principal reason for giving the allowance in the case of the married couple is the aggregation. There is no aggregation in the case of people living together who are not married, and therefore cannot be treated on the same basis. If there is to be any increase allowed for a mother living with the son it would be better dealt with on the general question of allowances which will come up on another Clause. This whole matter was gone into before the Income Tax Commission and the point of view put forward by my hon. Friend opposite (Mr. Lawson) was considered, but we felt that we could not go any further than we did.
§ Mr. W. GRAHAMI am very much disappointed at the reply of the Financial Secretary to the Treasury. As another Member of the Royal Commission, may I say that this is one of the parts of the Report with which I personally disagreed, and although, with my right hon. Friend opposite, I signed the general statement, I would point out that it included a great deal on which it was impossible to make the minor reservations which we had in mind? What is the position? By this Amendment we are seeking to put the unmarried man who happens to maintain his mother in the same position as a married couple who receive exemption now at the rate of £250 per annum. Undoubtedly there are certain practical difficulties in the way. There is this difficulty, for 1506 example: You may have one or two sons jointly maintaining the mother. A practical difficulty of that kind can be easily overcome, and I am prepared to look beyond such difficulties to the actual position as we find it mainly among the industrial and professional classes in this country. No Member of this House would be prepared to dispute that the position in many homes in which there is a son with an aged mother to maintain is undeniably harder than the position in a home in which there happen to be only a married couple. For the most part the young married couple, enjoying an exemption of £250, have health, strength, and ability to work, but in a large number of the cases covered by this Amendment the mother or aged person is incapacitated from work, and requires special nourishment and consideration, which throw a severe strain on the resources of the son to maintain her. I think, from the point of view of hardship, therefore, a very good case can be established for this Amendment. I gather that the Financial Secretary to the Treasury indicated that this proposal would upset the structure of the allowances under the Income Tax laws or recommendations. There may be something to be said for that argument, but may I point out what the Finance Bill itself provides in the matter of allowances for dependents and relatives? There are two allowances for a dependent mother, namely, £45 per annum and £25 per annum. The allowance of £45 is dependent upon there being young sisters or brothers to maintain, and upon their remaining in the home for that purpose. The allowance is never given where that condition is not in force. The other allowance of £25, which is awarded to a son in this position, is only given when the aged parent is incapacitated by ill-health or infirmity.
§ Mr. PRETYMANI think not. I am referring to Clause 21.
§ Mr. GRAHAMI understood that that condition was attached; but, even if it is not attached, the allowance of £25 is altogether insufficient. I think there is a broader point of principle to be considered in connection with this matter. I took the view, after hearing all the evidence given before the Royal Commission, that, while we had established a very generous allowance for married couples, the scheme of recommendations which we had pro- 1507 posed for the acceptance of the Chancellor of the Exchequer did not do complete and real justice to those people who were single, but had dependent relatives to maintain. That is one of the undeniable weaknesses of the Income Tax structure of this country. It is generous to married couples and to married people with children, but it is not proportionately generous to people who are single and have dependent relatives to maintain. This Amendment would meet in a plain and simple manner at least a part of that difficulty, and I am hoping that we shall not pass from it this afternoon without receiving some further satisfaction and some promise from the Chancellor of the Exchequer.
Sir WILLIAM BARTONIt seems to me that this proposal, in its present form, is one-sided. It says, "A householder supporting his mother"; but supposing that the householder were a daughter, it would be absolutely unfair that, while a son on whom family responsibilities devolved would be favoured under the Finance Bill, a daughter who, as is not infrequently the case, has the same responsibility should be charged.
§ Mr. GRAHAMThe word "householder" would cover the case of a daughter.
§ Mr. H0LMESI hope the Chancellor of the Exchequer will further consider this proposal. I desire to draw attention to the fact that it is very limited in its scope. It does not mean that every son who is contributing to the support of a widowed mother is going to get additional benefit. The son has to remain single; otherwise he does not get the relief. I think everyone desires, as far as possible, to assist a man who devotes himself to supporting his widowed mother, often at much self-sacrifice on his part. The number of these cases throughout the country must be very limited, and it will not cost more than a few thousands a year. There is no doubt that men who
§ have taken upon themselves the responsibility of taking a house and supporting a widowed mother do feel that, as compared with married men, they are badly treated by the Inland Revenue Department in not getting the full allowance.
Mr. CHAMBERLAINI venture to appeal to the Committee to bear in mind the broad effect of such concessions as those pressed in this and in the previous and coming Amendments. I beg the Committee to remember that the whole of the Clauses before the House are in themselves a concession to the poorer taxpayers. We are apt, sometimes, to listen to the dictates of our hearts rather than of our heads It is my disagreeable duty to ask the Committee to use its head, and to consider where the impulse of its heart, when a hard case is being brought forward, will land us eventually. I should like to show the Committee in general terms what is the effect of these Clauses. We have followed in every case the recommendations of the Royal Commission, except in some very minor matters, where we have varied their recommendation in favour of the taxpayer, in order to simplify the collection of the tax. The scheme which the Royal Commission recommends, and which this Bill carries into effect, will cost the State something like£18,000,000, of which £16,000,000 goes to people with incomes below £2,000. This part of the Bill, as will be seen, is really in itself a great concession to people with small incomes. I beg hon. Members of the Committee to receive it in that spirit. It is not easy to make such concessions even as that, in the midst of financial pressure, and I beg hon. Members not to take that as a jumping-off point from which to launch complaints against the Chancellor of the Exchequer or the Government. I trust that they will help me in my very difficult task, or, at any rate, will not make it more difficult.
§ Question put, "That those words be there inserted."
§ The Committee divided: Ayes, 78; Noes, 240.
1509| Division No. 192.] | AYES. | [5.25 p.m. |
| Bagley, Captain E. Ashton | Briant, Frank | Entwistle, Major C. F. |
| Barnes, Major H. (Newcastle, E.) | Bromfield, William | Galbraith, Samuel |
| Barton, Sir William (Oldham) | Carr, W. Theodore | Glanville, Harold James |
| Bell, James (Lancaster, Ormskirk) | Casey, T. W. | Graham, W. (Edinburgh, Central) |
| Bottomley, Horatio W. | Clynes, Rt. Hon. J. R. | Griffiths, T. (Monmouth, Pontypool) |
| Bowerman, Rt. Hon. Charles W. | Cowan, D. M. (Scottish Universities) | Grundy, T. W. |
| Bowyer, Captain G. E. W. | Davies, A. (Lancaster, Clitheroe) | Guest, J. (York, W. R., Hemsworth) |
| Bramsdon, Sir Thomas | Davison, J. E. (Smethwick) | Hallas, Eldred |
| Hayday, Arthur | Myers, Thomas | Taylor, J. |
| Hayward, Major Evan | Newbould, Alfred Ernest | Thomas, Brig.-Gen. Sir O. (Anglesey) |
| Herbert, Hon. A. (Somerset, Yeovil) | Newman, Sir R. H. S. D. L. (Exeter) | Thomson, T. (Middlesbrough, West) |
| Hirst, G. H. | O'Grady, Captain James | Thorne, G. R. (Wolverhampton, E.) |
| Hodge, Rt. Hon. John | Palmer, Charles Frederick (Wrekin) | Tootill, Robert |
| Hogge, James Myles | Parkinson, Albert L. (Blackpool) | Walton, J. (York, W. R., Don Valley) |
| Holmes, J. Stanley | Rae, H. Norman | Warren, Lieut.-Col. Sir Alfred H. |
| Irving, Dan | Rendall, Athelstan | Waterson, A. E. |
| Johnstone, Joseph | Richardson, R. (Houghton-le-Spring) | Wedgwood, Colonel J. C. |
| Kelley, Major Fred (Rotherham) | Roberts, Frederick O. (W. Bromwich) | White, Charles F. (Derby, Western) |
| Kenyon, Barnet | Scott, A. M. (Glasgow, Bridgeton) | Wignall, James |
| Lambert, Rt. Hon. George | Sexton, James | Williams, Aneurin (Durham, Consett) |
| Law, Alfred J. (Rochdale) | Short, Alfred (Wednesbury) | Wilson, Rt. Hon. J. W. (Stourbridge) |
| Lunn, William | Simm, M. T. | Wood, Hon. Edward F. L. (Ripon) |
| Lyle-Samuel, Alexander | Sitch, Charles H. | Wood, Major M. M. (Aberdeen, C.) |
| Maclean, Neil (Glasgow, Govan) | Stanton, Charles B. | Young, Robert (Lancaster, Newton) |
| Mills, John Edmund | Sturrock, J. Leng | |
| Murray, Dr. D. (Inverness & Ross) | Swan, J. E. | TELLERS FOR THE AYES.— |
| Murray, John (Leeds, West) | Sykes, Sir Charles (Huddersfield) | Mr. Frederick Hall and Mr. Lawson. |
| NOES. | ||
| Adair, Rear-Admiral Thomas B. S. | Dawes, Commander | Jones, Henry Haydn (Merioneth) |
| Agg-Gardner, Sir James Tynte | Dennis, J. W. (Birmingham, Deritend) | Jones, J. T. (Carmarthen, Llanelly) |
| Ainsworth, Captain Charles | Dockrell, Sir Maurice | Jones, William Kennedy (Hornsey) |
| Amery, Lieut.-Col. Leopold C. M. S. | Du Pre, Colonel William Baring | Joynson-Hicks, Sir William |
| Armitage, Robert | Falle, Major Sir Bertram G. | Kidd, James |
| Ashley, Colonel Wilfrid W. | Farquharson, Major A. C. | Kinloch-Cooke, Sir Clement |
| Astbury, Lieut.-Commander F. W. | Fell, Sir Arthur | Larmor, Sir Joseph |
| Baird, Sir John Lawrence | FitzRoy, Captain Hon. E. A. | Law, Alfred J. (Rochdale) |
| Baldwin, Rt. Hon. Stanley | Flannery, Sir James Fortescue | Law, Rt. Hon. A. B. (Glasgow, C.) |
| Balfour, George (Hampstead) | Foreman, Henry | Lewis, Rt. Hon. J. H. (Univ., Wales) |
| Banbury, Rt. Hon. Sir Frederick G. | Foxcroft, Captain Charles Talbot | Lloyd, George Butler |
| Banner, Sir John S. Harmood- | Fraser, Major Sir Keith | Lloyd-Greame, Major Sir P. |
| Barnston, Major Harry | Fremantle, Lieut.-Colonel Francis E. | Locker-Lampson, G. (Wood Green) |
| Beckett, Hon. Gervase | Gange, E. Stanley | Locker-Lampson, Com. O. (H'tingd'n) |
| Bell, Lieut.-Col. W. C. H. (Devizes) | Ganzoni, Captain Francis John C. | Macdonald, Rt. Hon. John Murray |
| Bellairs, Commander Cariyon W. | Gardiner, James | Mackinder, Sir H. J. (Camlachle) |
| Benn, Sir A. S. (Plymouth, Drake) | Gardner, Ernest | McLaren, Robert (Lanark, Northern) |
| Benn, Capt. Sir I. H., Bart.(Gr'nw'h) | Gibbs, Colonel George Abraham | M'Micking, Major Gilbert |
| Betterton, Henry B. | Gilbert, James Daniel | Macnamara, Rt. Hon. Dr. T. J. |
| Bigland, Alfred | Gilmour, Lieut.-Colonel John | McNeill, Ronald (Kent, Canterbury) |
| Bird, Sir A. (Wolverhampton, West) | Glyn, Major Ralph | Mallalieu, F. W. |
| Blair, Reginald | Goff, Sir R. Park | Malone, Major P. B. (Tottenham, S.) |
| Boscawen, Rt. Hon. Sir A. Griffith- | Grant, James A. | Marriott, John Arthur Ransome |
| Bowles, Colonel H. F. | Green, Joseph F. (Leicester, W.) | Martin, Captain A. E. |
| Breese, Major Charles E. | Greig, Colonel James William | Matthews, David |
| Bridgeman, William Clive | Gretton, Colonel John | Meysey-Thomson, Lieut.-Col. E. C. |
| Briggs, Harold | Guinness, Lieut.-Col. Hon. W. E. | Middlebrook, Sir William |
| Broad, Thomas Tucker | Gwynne, Rupert S. | Mond, Rt. Hon. Sir Alfred M. |
| Brown, Captain D. C. | Hallwood, Augustine | Montagu, Rt. Hon. E. S. |
| Buchanan,Lieut.-Colonel A. L. H. | Hall, Lieut.-Col. Sir F. (Dulwich) | Moore, Major-General Sir Newton J. |
| Buckley, Lieut.-Colonel A. | Hall, Rr-Adml Sir W. (Liv'p'l,W.D'by) | Moreing, Captain Algernon H. |
| Bull, Rt. Hon. Sir William James | Hambro, Captain Angus Valdemar | Morrison, Hugh |
| Burdon, Colonel Rowland | Hanson, Sir Charles Augustin | Mosley, Oswald |
| Burn, Col. C. R. (Devon, Torquay) | Harmsworth, C. B. (Bedford, Luton) | Mount, William Arthur |
| Butcher, Sir John George | Harris, Sir Henry Percy | Murchison, C. K. |
| Campbell, J. D. G. | Haslam, Lewis | Murray, Lieut.-Colonel A. (Aberdeen) |
| Carew, Charles Robert S. | Henderson, Major V. L. (Tradeston) | Murray, C. D. (Edinburgh) |
| Carson, Rt. Hon. Sir Edward H. | Hennessy, Major J. R. G. | Murray, Dr. D. (Inverness & Ross) |
| Carter, R. A. D. (Man., Withington) | Henry, Denis S. (Londonderry, S.) | Murray, Major William (Dumfries) |
| Cautley, Henry S. | Herbert, Dennis (Hertford, Watford) | Nall, Major Joseph |
| Cayzer, Major Herbert Robin | Hills, Major John Waller | Neal, Arthur |
| Cecil, Rt. Hon. Evelyn (Birm., Aston) | Hinds, John | Nicholson, William G. (Petersfield) |
| Cecil, Rt. Hon. Lord H. (Ox. Univ.) | Hoare, Lieut.-Colonel Sir S. J. G. | Nield, Sir Herbert |
| Chadwick, Sir Robert | Holbrook, Sir Arthur Richard | Norris, Colonel Sir Henry G. |
| Chamberlain, Rt. Hn. J. A. (Birm., W.) | Hood, Joseph | Oman, Sir Charles William C. |
| Chamberlain, N. (Birm., Ladywood) | Hope, Sir H. (Stirling &' Cl'ckm'nn'n,W.) | O'Neill, Major Hon. Robert W. H. |
| Clough, Robert | Hopkins, John W. W. | Palmer, Major Godfrey Mark |
| Coates, Major Sir Edward F. | Hopkinson, A. (Lancaster, Mossley) | Palmer, Brigadier-General G. L. |
| Coats, Sir Stuart | Horne, Sir R. S. (Glasgow, Hillhead) | Peel, Col. Hn. S. (Uxbridge, Mddx.) |
| Cockerill, Brigadier-General G. K. | Hotchkin, Captain Stafford Vere | Perkins, Walter Frank |
| Cohen, Major J. Brunel | Howard, Major S. G. | Perring, William George |
| Cooper, Sir Richard Ashmole | Hudson, R. M. | Philipps, Gen. Sir I. (Southampton) |
| Cope, Major Wm. | Hunter, General Sir A. (Lancaster) | Pilditch, Sir Philip |
| Cory, Sir J. H. (Cardiff, South) | Hunter-Weston, Lieut-Gen. Sir A. G. | Pownall, Lieut.-Colonel Assheton |
| Craig, Colonel Sir J. (Down, Mid) | Hurst, Lieut.-Colonel Gerald B. | Pratt, John William |
| Craik, Rt. Hon. Sir Henry | Illingworth, Rt. Hon. A. H. | Pretyman, Rt. Hon. Ernest G. |
| Curzon, Commander Viscount | James, Lieut.-Colonel Hon. Cuthbert | Pulley, Charles Thornton |
| Dalziel, Sir D. (Lambeth, Brixton) | Jephcott, A. R. | Purchase, H. G. |
| Davidson, Major-General Sir J. H. | Jellett, William Morgan | Randles, Sir John S. |
| Davies, Major D. (Montgomery) | Jesson, C. | Ratcliffe, Henry Butler |
| Davies, Thomas (Cirencester) | Jodrell, Neville Paul | Raw, Lieut.-Colonel N. |
| Davison, Sir W. H. (Kensington, S.) | Jones, Sir Evan (Pembroke) | Rawlinson, John Frederick Peel |
| Rees, Sir J. D. (Nottingham, East) | Smithers, Sir Alfred W. | Whitla, Sir William |
| Remer, J. R. | Sprot, Colonel Sir Alexander | Wigan, Brig.-Gen. John Tyson |
| Remnant, Sir James | Stanley, Major H. G. (Preston) | Willey, Lieut.-Colonel F. V. |
| Roberts, Sir S. (Sheffield, Ecclesall) | Steel, Major S. Strang | Williams, Lt.-Com. C. (Tavistock) |
| Robinson, S. (Brecon and Radnor) | Stewart, Gershom | Williams, Col. Sir R. (Dorset, W.) |
| Robinson, Sir T. (Lancs. Stretford) | Sugden, W. H. | Willoughby, Lieut.-Col. Hon. Claud |
| Rodger, A. K. | Surtees, Brigadier-General H. C. | Wills, Lieut.-Colonel Sir Gilbert |
| Rogers, Sir Hallewell | Sutherland, Sir William | Wilson, Capt. A. S. (Holderness) |
| Roundell, Colonel R. F. | Talbot, G. A. (Hemel Hempstead) | Wilson, Daniel M. (Down, West) |
| Royden, Sir Thomas | Terrell, George (Wilts, Chippenham) | Wilson, Lieut.-Col. M. J. (Richmond) |
| Samuel, A. M. (Surrey, Farnham) | Thomas, Sir Robert J. (Wrexham) | Wolmer, Viscount |
| Samuel, Rt. Hon. Sir H. (Norwood) | Thomas-Stanford, | Charles Wood, Major S. Hill- (High Peak) |
| Sanders, Colonel Sir Robert A. | Thorpe, Captain John Henry | Yeo, Sir Alfred William |
| Seager, Sir William | Townley, Maximilian G. | Young, Lieut.-Com. E. H. (Norwich) |
| Seddon, J. A. | Tryon, Major George Clement | Young, Sir Frederick W. (Swindon) |
| Shaw, William T. (Forfar) | Turton, E. R. | Young, W. (Perth & Kinross, Perth) |
| Shortt, Rt. Hon. E. (N'castle-on-T.) | Waddington, R. | Younger, Sir George |
| Smith, Sir Allan M. (Croydon, South) | Weston, Colonel John W. | |
| Smith, Harold (Warrington) | White, Lieut.-Col. G. D. (Southport) | TELLERS FOR THE NOES.— |
| Lord E. Talbot and Mr. Parker. |
§ Mr. G. LOCKER-LAMPSONI beg to move, at the end of Sub-section (2) to add the words, "except when the joint income of husband and wife does not exceed five hundred pounds, in which case this additional allowance shall not exceed one hundred and thirty-five pounds."
My object is really to put back married people with small incomes in at least as good a position as they were in before the Bill passed into law. The Chancellor of the Exchequer said just now that the Bill was really giving concessions to the poorer Income Tax payer, and he asked us not to pile on these concessions, and not to ask for additional benefits. But this Clause does not give additional benefits to poor Income Tax payers. It is really putting them in a worse position than they are under the existing Act. Under Section 28 of the Consolidated Income Tax Act, 1918, where a man and woman are married, with an income of not more than £500 a year, and the wife's income is earned, they are separately assessed—it is the only case in which husband and wife are separately assessed—and the wife generally gets off paying any Income Tax whatsoever. But under the present proposal the incomes of husband and wife, even if they are in the aggregate not more than £500 a year, and they arc both earning their incomes, are aggregated, they are not separately assessed, and the wife can only get relief up to £45. I should like to take an instance in order to show how this will work out. Supposing a man has an earned income of £120 and an unearned income of £250, and supposing the wife has an earned income of £120, they have a total income of £490. Under this Bill, if that couple does not happen to have any children they get a relief of £294, which leaves a taxable income of £196.
1512 The wife's share of that is about £63, and she will have to pay under this Clause a 3s. tax on £63. Under the existing law she would not have to pay any tax at all, because the aggregate income is under £500 a year, both people earning their income and the wife earning the whole of hers. I should have thought that at any rate in this case the House ought to insist that instead of worsening the situation of people with very low-earned incomes, it should remain the same. I am not asking that their situation should be improved. I am asking that you should still give the wife the advantage of not having to pay any Income Tax as a rule when the aggregate income is not more than £500 a year and both incomes are earned.
Mr. CHAMBERLAINI hope my hon. Friend will not feel it necessary to press the Amendment. It is true there may be cases in which less relief is given than under the present law; but, speaking broadly, what I said is true, that the effect of the change of the law is to extend relief and not to limit it. It may operate the other way in a particular case, but it is generally favourable to the taxpayer and not to the Treasury. The matter came before the Commission and they specifically recommended that the relief in its present form should be discontinued and that this new relief should be substituted for it. It is impossible to check particular cases presented across the floor of the House, but I know my hon. Friend's care and I have no doubt the case he has presented is accurately stated. But let me illustrate the general working by another case. Take a husband and wife who earn £250 and £150 respectively. Let us eliminate children for the sake of simplicity. Under last year's Income Tax law they would be charged 1513 tax on £110. On my present proposal they will be charged tax on £90. Under my hon. Friend's proposal they will escape tax altogether. But the relief under Section 21 of the Income Tax Act was conditional on the total joint income of the husband and wife not exceeding £500. Under the proposal of the Commission, which I have adopted, there is no such condition, and a new provision removes the old restriction under which no relief was available where the income of the wife was derived from a share in the profits of a business carried on jointly by the husband and wife or from a salary paid by the husband for the wife's services in the business. The sole condition now is that the wife shall be in receipt of an earned income. The effect of the change is generally favourable to the class in which my hon. Friend is interested, and I hope he will not press the Amendment.
§ Mr. HOLMESI can quite understand that the right hon. Gentleman wants generally to follow the recommendations of the Royal Commission, but surely it is one of the privileges of Members of the House to point out where small hardships will ensue if that is carried out, and I think the hon. Member (Mr. Locker-Lampson) has done a great service in discovering this particular point. The right hon. Gentleman's argument is, "It may be a hardship here, but, generally speaking, we have improved the position of poor people." There are a number of married people who go to work, and between them earn less than £500 a year, who at present get relief under Section 21 of the Act of 1918. It will be no consolation to them to be told, when they are assessed for the present year and have to pay more, that they are not going to get so much concession as they always have had in the past, but they will be glad to know that certain other people are getting more concession than they did before. I can understand the right hon. Gentleman saying that these Amendments that are suggested are not much in themselves, but they are always taking something away from the Revenue. The last one we divided upon would not have cost the Revenue more than £20,000. This particular one would probably not cost more than that sum per year, if so much, but it will be a hardship to these people who have had this concession for years to 1514 have it taken away from them, and I hope the hon. Member will press it.
Sir F. HALLI quite appreciate the difficulty the right hon. Gentleman is in. He says, "As the Bill is drawn there will be a benefit to a larger number, but I admit that it will worsen the position of others." I am sure he appreciates how difficult it is for people who have their position worsened at any time, and particularly in the times through which we are passing, and it is not equitable that these people should be in a worse position than under the present law. Surely he can bring up some words between now and Report which will cover the hard cases in order that people who are getting benefit at present shall continue to get it. If he will undertake to do that, I am sure my hon. Friend would be prepared to withdraw the Amendment. If he cannot, I trust my hon. Friend will press it to a Division. I hope it will not be necessary, because I am sure the right hon. Gentleman appreciates the position in which these people are placed with the enormous increase in the cost of living and the heavy tax they have to pay. Surely these are not times in which you should put heavier burdens upon them.
Mr. CHAMBERLAINI appreciate the spirit in which the hon. and gallant Gentleman has spoken. In the whole series of Amendments there is no absolute logical basis for any figure of exemption or relief. Every time a concession is made it is used as an argument for a further concession, either for the same person or for other persons. I believe that the best thing to do, without prejudice and in spite of the loss of money, is to accept the considered opinion of so expert and careful a body of men as the Royal Commission and to stand by that. I do not believe there is any other safe standing ground. It is perfectly true that the Report of the Royal Commission does not affect the discretion of this House, and I quite see the appeal to hon. Members of the point of view that, in making a general rule, we should not worsen the position of any individuals. That is incompatible with the Report of the Royal Commission, or with any attempt to deal on settled principles with Income Tax reform. If it were simply in this case that the principle could be adopted without reference to any other 1515 case, there would be a good deal to be said for the hon. Member's case, but one of the objects of the Royal Commission is to get rid of the sudden jump in the Income Tax scale. Instead of having a smoothly ascending line, according as income rises, you have steep steps, and you cannot level off the steep steps except by adding a little to the burden immediately below, while alleviating the burden immediately above. I cannot, however, accept the principle which my hon. Friend asks me to adopt, and to say that in adopting the changes generally nobody shall be worse off. I can only say that the general effect on the lower classes of Income Tax payers is that of considerable relief.
Lieut.-Colonel Sir F. HALLI realise the difficulties under which the right hon. Gentleman is labouring, and I appreciate, and the country will appreciate, the amount of work which has been done by members of the Royal Commission; but when you find a case such as this where people are going to be in a worse position than they are to-day, it is not asking for the work of the Royal Commission to be upset to suggest that in this one case these people should not be put in a worse position.
§ Mr. LOCKER-LAMPSONThis is the only case.
Sir F. HALLThat confirms my opinion. Under the circumstances something might be done for this one case. It is said you cannot legislate for everybody, but the Chancellor of the Exchequer is practically legislating for everybody else, but not for the single case in which these people are going to be worse off than they are at the present time. Some words might be found which would meet the case.
§ Mr. LOCKER-LAMPSONThere is nothing I should like better than to meet the wishes of my right hon. Friend in every possible way. Although I do not want to press for a Division this, so far as I am aware, is the only case in which people with very low incomes are worsened under this Bill, and I shall feel compelled to press the matter. There may be other cases, but this is the only one I can find, and I cannot believe that it will be any great cost to the Exche- 1516 quer. I am not asking for any extra, advantage to be given. All that the Amendment does is to put them in the position which they have held up to the present time. Therefore, it really will not cost the Exchequer any extra money or, at any rate, very little. I feel strongly about this matter, because I have read. the Report of the Royal Commission very carefully, and the whole idea of the Commission in regard to this point was that the incomes should not be separately assessed. They wanted husband and wife to have their incomes aggregated. throughout, and by taking that general principle they have by accident knocked, out this very important privilege which hitherto has been enjoyed by people with very low incomes.
§ Sir R. NEWMANIf we are to go to a Division, will the Chancellor of the Exchequer deal with the statement that these are the only people of small incomes who will suffer by the change in the Income Tax system? If that is so, it must influence a good many Members. I sympathise with the Chancellor of the Exchequer. We must get the money, but if we are going to alter the incidence of our Income Tax, it is rather hard that the only class that should be singled out. to have increased taxation should be the man and wife who have a small income like £500. There are a great many people who have small fixed incomes of about £500. I was rather alarmed by what the right hon. Gentleman said, if it is correct, that he is going to stick absolutely to the Report of the Royal Commission on Income Tax. Although we have great respect for those gentlemen, I should like to feel that the Chancellor of the Exchequer brings a little of his own judgment to bear upon the matter, otherwise we should know what he was going to accept or refuse by merely reading the Report of the Royal Commission, and without having any discussion at all.
Mr. CHAMBERLAINThe general effect of the Bill is very largely to extend 1517 the relief given to the people with small incomes at the expense of people with large incomes. At certain stages in the adjustment, some charge is added to people who have hitherto, owing to an accident, got relief disproportionate to that given to others in analogous positions, but the main effect is to extend the relief. My hon. Friend (Mr. G. Locker-Lampson) says that his Amendment could only mean a trifling sum. It will mean £500,000, and if there is £500,000 to give away this is really not the case in which to give it.
§ Mr. LOCKER-LAMPSONIt is not half a million given away.
§ Mr. LOCKER-LAMPSONYou are taking half a million away.
Mr. CHAMBERLAINIf I went back to the old system, and rejected the recommendation of the Royal Commission, that would be a different position; but to graft my hon. Friend's proposal on to the proposals of the Royal Commission means a loss of £500,000.
§ Question put, "That those words be there added."
§ The Committee divided: Ayes, 96; Noes, 232.
1519§ Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
§ 6.0 P.M.
§ Sir F. BANBURYUnder the policy which is now being adopted a very large number of people will in future be exempt from bearing any of the burden of Income Tax. As I understand the position, a married man with an income of less than £250 a year does not pay any Income Tax, and neither does a single man with an income of less than £150 a year. This is a step in the wrong direction. The Chancellor of the Exchequer has informed me that the result of these concessions would be to reduce the number of Income Tax payers approximately to 2,450,000 out of a population of some 45,000,000, a large pro- 1520 portion of whom under the last Franchise Act have votes. These people though paying no Income Tax can select candidates for Parliament and obtain from them pledges with regard to the imposition of taxes, and they may obtain pledges that may benefit that very large class at the expense of the small class, with the result that large burdens may be thrown on the small class for the benefit of people who are not contributing a farthing to the expenditure.
That is a very serious state of affairs. There has been an enormous increase in the amount spent on education, on unemployed benefit and subsidies for bread and all kinds of things, and privileges are given to these people who have voting power and do not pay a 1521 single farthing to the expenditure which through their Members they compel the House to incur. How long is that going on? Even before the Coalition, when Mr. McKenna was Chancellor of the Exchequer, and a Radical Government was in power, we had a proposal which was adopted not for increasing exemption, but for reducing it, and as far as I remember the limit of exemption was reduced from £160 to £130 and that met with the unanimous approval of a House which could not be said to represent exclusively or indeed to any extent the propertied classes. Now when we are face to face with warlike expenditure in time of peace, have we any proposals which would bring home to the vast majority of people what the result of all this expenditure is? On the contrary we have proposals to relieve the bulk of people from the main source of taxation which goes to provide all these various expenditures. Income Tax, Super-tax and Death Duties, from which the vast majority of the people are relieved, do form a very considerable proportion of the whole taxation of the Country. I suppose it is too late to ask the Chancellor of the Exchequer to reconsider his decision. His answer is that the Royal Commission on Income Tax did recommend some such course. I believe that it did, but I do not believe that it is necessary to assume that a Royal Commission, even with my right hon. Friend (Mr. Pretyman) upon it, is always infallible. In this particular case I think that it has made a mistake.
Economists for many years have held that if you arrive at a point when you tax the few for the benefit of the many, you come to a very serious crisis in the history of the country where such a thing exists. I see opposite an hon. and gallant Gentleman (Major-General Sir N. Moore) who has some connection with our Dominions over the seas, and, if I am not mistaken, something of that sort has arisen at various times in the Dominions, and the evil of it has been recognised. What steps have been taken to amend it, I cannot say. I do earnestly ask the Committee to pause before sanctioning a proposal of this sort. Under the Parliament Act of 1911, the House of Lords, which in many cases during the history of this country has shown great wisdom when crises have arisen, has not any longer any power over financial matters.
1522 Therefore, the responsibility resting on us is greater than ever before. I am certain that the Chancellor of the Exchequer in his heart desires to do everything he can to reduce the enormous expenditure of the country, but I do not think that the bulk of the people realise what is going to happen if this enormous expenditure continues. The only way to bring home to them what is going on now, if they desire to have all these various advantages—increase of old age pensions, increase of pre-War pensions, free education, regardless of cost—and if the State is to subsidise this, that and the other, then—
§ Mr. R. RICHARDSONAnd provide red coats!
§ Sir F. BANBURYThe provision of red coats, in my opinion, is likely to lead to economy.
§ Sir F. BANBURYI do not want to be drawn by any red herring. I believe that the provision of red coats will make the Army more attractive, and may do away with the necessity of increasing the pay of the soldier. You have to get your Army. The only way to bring expenditure home to the people, who, for good or for evil, have in their hands the destiny of the country, is to make them bear, every one of them, a share of the expense to which they themselves agree.
§ Colonel WEDGWOODThe right hon. Baronet is always right, but, I think that on this occasion he is a little too pessimistic. In the last three years, and particularly in the last year, the people have had an education that they never had before, and they are not likely to forget it. The right hon. Gentleman thinks that unless you impose direct taxes upon the people they will not realise what they have to pay. They have learned very effectively curing the past year that they have to pay. Every time the Government goes in for a little additional expenditure they find that the cost of living goes up. They are realising acutely that every time wages are paid, whether it be the wages of the miners or of the railway workers, the cost of living goes up. They are learning political economy much more quickly than did the upper and middle classes. Above all things, they are learning that it, is not the person 1523 who first pays a tax, the person who actually puts down the cash, who ultimately pays the tax. It is the indirect effect of taxation that really hits them. After all, we pay this Income Tax, but we know that we do not really pay it; we pass it on, you and I. [HON. MEMBERS: "How "]. I invest money. I bought a few shares the other day. I found I was able to get 8 per cent. for my money with exactly the same security as would have brought me in 5 per cent. six years ago. As a result, I do not pay Income Tax on that. It is paid for by the people who require the money I have to lend. The people who want my capital have to pay the Income Tax which I hand over to the Treasury, which means that the whole of that Income Tax falls upon the cost of production and is transferred to the consumer of the article made with the money I lend. Capitalists do not pay the Income Tax; the consumer pays it in the long run. That is why I think the right hon. Baronet over-estimates the importance of direct payment of taxes. We are coming to realise that the capitalist is wonderfully agile in shifting the burden of the taxes on to other people. I think he may rest assured that the ordinary elector, and particularly the woman elector knows that it is the workers who pay in the long run all the taxes that are imposed.
§ Captain ELLIOTI do not propose to follow the last two speakers into their usurious adventures with the money of the capitalist and the Income Tax which the hon. Member opposite grinds out of the pockets of the widows and orphans. I think that the last speaker proves rather too much. If it does not matter how much taxation is placed on the capitalist, because the capitalist will always get out of it, it seems to me that the Chancellor of the Exchequer might as well transfer the whole of taxation to the working classes, who, by his hypothesis, have to pay anyway. To say that was not the purpose for which I rose. On a point of definition I am not quite clear whether "wife" includes "husband" and whether the female sex includes the male sex. I understand that as a rule in an Act of Parliament "man' nowadays includes " woman," and "he" includes "she."
§ Captain BOWYERI welcome this Clause. It seems to me that the right 1524 hon. Member for the City of London (Sir F. Banbury) forgot that the voters who pay no Income Tax at least pay very large sums in indirect taxation. If we had a scheme whereby everybody without exception paid direct taxes I think that would be the best plan, but so long as you have direct and indirect taxes you must have exemptions.
§ Mr. A. M. SAMUELThe hon. Member who has just spoken argued that those who pay no direct taxation contribute towards the upkeep of the State by indirect taxation. The £350,000,000 to be raised by Customs and Excise are the form of indirect taxation to which he probably referred. Part of that sum is paid by direct taxpayers also. Although the working classes may pay a very large sum in indirect taxation, under Customs and Excise, out of the £350,000,000 for a normal year, I find they receive back in Education, in Old-age Pensions, in the benefits of the Ministry of Health, in Housing, in War pensions and other things, a total of £259,000,000. I make no point one way or the other as to whether that is right or wrong, but we ought not to let it go forth unchallenged that those who pay no direct taxation but pay indirect taxes do not receive more back in benefits than they pay in indirect taxation. It would be correct to say that for every penny of indirect taxation paid by the workers they receive back a pennyworth of benefit; consequently the burden of the upkeep of the State does not fall upon them, and that fact should be recognised.
§ Mr. R. RICHARDSONI admire the outspokenness of the right hon. Baronet (Sir F. Banbury). He is, at least, honest in his convictions. I would like to point out to him that indirect taxation falls very heavily indeed upon the working classes. Take a man with less than £250 a year and compare him with a man with £10,000 a year. If the poorer man wants to put a stamp on a letter he has to pay the same amount as the richer man. I desire to see a single tax, and that would be an Income Tax. It would be fair to everyone concerned.