§ There are also a few important alterations in the Income Tax law and a few minor modifications which I have to submit for the approval of the Committee. I will deal with them in order. A decision of the House of Lords last summer has laid down in effect that owing to a loophole in the law in cases where interest is paid upon securities or money without deduction of Income Tax the Exchequer must lose Income Tax on the interest for one year out of any period of years for which the security is held by an individual taxpayer. This is a question which arises in many instances, but chiefly in connection with various Government securities issued during the War, and I propose that this illogical condition of the law should be altered. Another decision of the House of Lords given very recently has overthrown the practice of 60 years in regard to the basis of assessment to Income Tax of many of the employés of public companies and the like. For reasons with which I need not trouble the Committee in detail, this decision has rendered urgent a reform in the method of assessment of employés, the necessity for which had already impressed the Royal Commission on the Income Tax two years ago. In order to regularise the position, I shall propose legislation for basing the Income Tax assessment of all employés upon their salary or remuneration for the current year. This will result —in the beginning at least—in a loss of revenue to the Exchequer, but it will get rid of the complaints which have been made as to the disparities in the methods of assessment, and will put all employés in that category on the same basis.
1033§ I wish also to direct the attention of the Committee to certain instances of legal avoidance of Income Tax and Super-tax, which have recently become so prevalent as to produce, until they are corrected, startling inequalities in the incidence of taxation as between different taxpayers. I think it is fairly generally known that many people, by creating temporary or revocable trusts, have succeeded in avoiding their due share of Income Tax and Super-tax. Some people achieve the same end by setting up a one-man company, and in other directions, which I need not particularise, various devices are being adopted in order to avoid the intention of the law, which the mass of people are subject to. I think most people will recognise that it is not fair that those who are clever enough to find ways to do these things should benefit at the expense of others. Accordingly, I propose to introduce legislation, which, I hope, will commend itself to the Committee.