Section thirty-two of The Finance Act, 1921 (which relates to exemption of superannuation funds from Income Tax), shall be amended as follows:
At the end of paragraph (b), of Subsection (3), there shall be inserted the words "or for widows and/or orphans of persons employed in the trade or undertaking."—[Sir Leslie Scott.]
§ Brought up, and read the First time.
§ Sir LESLIE SCOTT
I beg to move, "That the Clause be read a Second time."
This proposes an extension of the exemption granted in respect of superannuation funds from Income Tax. The main Clause was passed in 1921 and exempted the investments of superannuation funds from taxation and also the contributions by the employers and by the employés. The object of the Clause was clearly to encourage thrift by 218 encouraging superannuation funds at a cost to the revenue which it was recognised would be very small. The extension which is involved in this Clause is to give the benefit of that exemption, which is at present limited to funds for the actual employés, to the case of their widows and orphans. It has been found in experience under the original Clause that it is very inconvenient to keep the widows' and orphans' fund out of the men's fund for all purposes and to have entirely distinct funds. In addition, it is felt that every reason which led the House to adopt the provision in 1921 is really equally applicable, and in certain respects even more so, in respect of the widows and orphans. In the case of widows and orphans the extreme limit of the exemption is from tax upon investments. As the widows and orphans will not themselves be making contributions and the contributions of the employers and of the 219 husbands or fathers, as the case may be, would have been the source of their contributions to the fund, this exemption is only for one-third, so to speak, of the benefits given by the Clause of 1921.
The truth of the matter is that in this country, with the British character as we know it, thrift, which necessitates putting by every week the same small sum of money in order to provide a fund out of which an annuity will be available in later life, or for orphans and widows, is an exceedingly difficult thing, and, in addition, if you assume that weekly habit of thrift, the knowledge of how wisely to invest the fund so accumulated is very rare, and those are the two real reasons in favour of superannuation funds, and why it is worth while to encourage them to the maximum. I understand the total cost to the revenue of this Clause will be very small. In addition, from the information available, these funds have a very decided effect in saving the revenue from the necessity of paying Old Age Pensions. I introduced to the Chancellor of the Exchequer, before he became Prime Minister, a deputation representing railway companies, the British Banking Association, and various manufacturers and others, and on that deputation the evidence was very striking that where superannuation funds had been at work for some little time, in some cases not one single member of the fund came upon the Old Age Pension, because the weekly income exceeded the limit, and, of course, on similar grounds there is considerable relief in regard to the Poor Law. I recognise that the Government have made a number of concessions this year. It may be that they cannot see their way to making an additional concession, but on the broad ground of encouraging thrift, even by a taxing Act, if it can be done at a small cost, it ought to be done. I recognise that a taxing Act should not be a vehicle, so to speak, for general legislation or social reform, but a small exemption of this kind has a really valuable social effect.
§ Sir W. JOYNSON-HICKS
I am sorry to have to tell my hon. and learned Friend that we are not able to accept the Clause for the moment. It raises 220 rather an extension of the original Clause which, through his instrumentality, was passed the year before last. I also had something to do with the inception of that Clause, and I have a good deal of sympathy with this Clause, but it is an extension of the original one, and it would involve a further call on the Exchequer, and as we have made a good many concessions during the last 24 hours, I hope my hon. and learned Friend will not press it to a Division.
§ Motion and Clause, by leave, withdrawn.