HC Deb 02 July 1923 vol 166 cc147-56

Notwithstanding anything in the Income Tax Acts, the income of a wage-earner who is casually employed by the hour or less period and who is not in the regular employment of one exployer shall be exempt from Income Tax.—[Mr. Sexton.]

Brought up, and read the First time.


I beg to move, "That the Clause be read a Second time."

This is not the first time that I have presented this Clause to the House. I brought it to the notice of two predecessors of the right hon. Gentleman the Financial Secretary to the Treasury. It deals with the hardships of the casual labourer under the present system of taxation. I hope the House will excuse me if I have to repeat myself in order to bring forward my argument. My only excuse for doing so is that the custom of the House is for the bulk of the Members to absent themselves from the arguments brought forward, and the only guide for them in the Division Lobby is the presence of the Tellers of the party that represents them. In the hope that the right hon. Gentleman was absent from the last Debate on this subject, and I think he was, I find my excuse for repeating the argument. The case I have to put forward is that the casual labourer employed by more than one employer is in a very awkward position with respect to the payment of Income Tax. He is assessed quarterly, and the first quarter may be a lean one. He may have four or five employers in the course of one week, and I will give a typical case to the right hon. Gentleman before I sit down. The second quarter may be a fat quarter with lean streaks. The assessment for the first quarter has to be paid in the second quarter, and that for the second quarter has to be paid in the third quarter, which is a lean one. Owing to the fact of the first quarter being a lean one, he is in debt to the tommy shop, which uses up all his money in the second quarter, and when the demand comes in the third quarter he has no money to pay. Being illiterate he lets the thing go by default. These men know nothing about Income Tax forms. They think that is a lawyer's job, and they do not understand it. The man gets a summons; he goes to Court or he does not go to Court, and the case goes against him.

I heard the right hon. Gentleman say the other night, in resisting certain Amendments, that there would be a loss of revenue. He is losing revenue in this case, because it is costing him more to collect the casual labourer's Income Tax than he gets out of it. I can give him the case of a man with a family of five who was not exempted from Income Tax, but who just came within the limit to the extent of probably £3. He got his summons, he stated his case himself, because he had no solicitor, and the case went against him. He could not pay; and he went to gaol for a fortnight. It cost the Government 30s. a week to keep that man in gaol a fortnight, which is £3. The wife and the two children whose income was assessed because the wife went out charing and the children were selling matches or papers, went to the workhouse, and it cost the State £2 a week to keep them there. When the man was released from prison the workhouse authorities put the wife and children into a taxicab, the only luxury they ever had in their lives, and brought them to the man and told him to find a home for them. I do not know what it cost to secure that £3 of Income Tax, if they ever got it. The right hon. Gentleman is spending the money of the Government in the hope of getting something which he really never gets. Take the cost of collection. Take the case of a man who has four employers in the course of one week. It may be one employer employs him in the morning, and another employs him in the afternoon. Look at the enormous cost it means to the employers to make returns. Look at the work it means to the Clerk of Customs in order to get at the facts accurately.

I have been told, "Oh, but a man has a remedy. If he overpays at the end of the year he can have a rebate." The right hon. Gentleman, however, seems to forget that the man has to pay the money before he gets a rebate, and he has not got the money to pay, and the only rebate he gets is gaol. I could give the right hon. Gentleman more than one case, but I think I have in principle given him enough. He says the taxes have to come in, but these taxes do not come in. That is just my point. Therefore, I would ask the right hon. Gentleman to see the reasonableness of the case I have to make. I could give a case where a man made a few pounds during a quarter. His children were trading on the streets, selling newspapers or matches, and that was counted in, and the wife's charing was counted in, and all this living from hand to mouth is counted in, and he has to pay Income Tax, and if he goes to gaol his tax is not wiped out. When the man comes out, a warrant, like the sword of Damocles, is hanging over his head all the time. The tendency on the part of that man, who feels like a fugitive from justice, will be not to seek work, because if he goes to work the law will be after him to grab his wages. I have often heard that the law is an ass, but if it ever is an ass it is so in connection with this tax on the casual labourer, because it imposes a tax that it never gets. I hope the right hon. Gentleman will at least see that this assessment, if it be not altogether abolished, will be so arranged that the man will have a chance at the end of the year to prove that he has not earned the income for the year on which he is assessed. It is a small concession to ask, and if he will promise me that, I shall not press my Amendment to a Division, but if he does not, I shall.


I beg to second the Motion. The facts given by my hon. Friend the Member for St. Helen's (Mr. Sexton) justify me in seconding this new Clause. All of us who represent riverside constituencies, largely occupied by casual labourers, have experience of cases of very great hardship inflicted on this class of men. I know of men, in my constituency, who have gone to prison because they have not paid Income Tax, yet at the very time, when they were sent to prison, they were out of work and on unemployment benefit. It seems extraordinary that a casual labourer should have his tax assessed upon three months' earnings when all other classes of taxpayers are assessed upon the whole 12 months. Why should the casual labourer, the most unfortunate member of the community, speaking generally, be differentiated against in this way? We in West Ham have actually had to keep the wives and children of men who have gone to prison because they have not paid on a successful quarter's earnings. This tax was introduced during the War, when everybody was expected to do their bit, financially and otherwise, and the consequences were that men in regular employment, doing well at that time, were in a position to pay, but now, what happens? In my own constituency, we have men who are working in seasonal trades. Down at the docks there are certain periods when certain trades are busy, and the result of the operation of this assessment is, that while a particular section may be busy for three months, they are slack for the other nine months, yet on the good period they are assessed over and above their means to pay, and when the tax collector comes, he generally comes when they are slack. The consequence is, that these men, not being able to pay, have to go.

I do not think any other section of the taxpayers of the country are so badly treated as are these men. If you are going to tax these men, tax them on the same basis as you tax other taxpayers. Give them the same length of time, and take the whole period, and I suggest that if you do that with a casual labourer, you will find that he will not come under the tax at all. You have plenty of chance of getting his earnings in a year. Any shipping company at the docks will tell them, and your inspectors have to find out, by interviewing the companies' officials, what the men earn. Therefore, I say that under present conditions, with reductions in wages taking place automatically, when we are threatened every day with reductions in wages, because a man has a good run of work, because for six or seven weeks in one quarter he may be working night and day, it is not fair to tax him on that period. This is another point. These men are not ordinary employés, working normal working hours. They have to work shifts, they have to work continuous work, they have to work whenever they are required to get a ship clear, and instead of working, as ordinary people do, so many hours a day, they have to work night and day until a job is finished. Surely it is not fair, therefore, because these men have to put forward extraordinary efforts to earn an extra shilling or two, because they happen to be extremely busy in a particular period, that that period should count as their average income, and the rest of the period, when they are out of work, should not count in their favour.

We are in favour of taxation on the ground of the ability of the people to pay, but we object to this differentiation. It was introduced when there was a circumstance in its favour. We knew, of course, that when millions of young men went out to the War, and were compelled by circumstances to leave their employment, there was a certain amount of extra employment created for certain classes of workers, particularly in the transport industries, and, as a consequence of those men having to go away, the men left had to work night and day, and were able to earn decent money. We all admit that, but the situation has completely changed now, and we have come back to less than the normal. In my own constituency, the average docker is not doing two days a week, but at certain periods he is earning more than the normal, and the consequences are that he is then liable to Income Tax. It is absolutely unfair to tax that man because for three months in the year he is doing well, on account of the seasonal nature of his occupation, but that he should have no allowance made for the nine months when he hangs about the dock gates not knowing when he is going to get a day's work. I hope the right hon. Gentleman will see his way to accept the Amendment.


I want to join with my two hon. Friends in asking that the casual labourer, whom, I think, my hon. Friend the Member for Silvertown (Mr. J. Jones) and my hon. Friend the Member for South Poplar (Mr. March) represent in this House to a very large extent, should be exempt from Income Tax. Experience proves to us without a shadow of doubt that neither the nation nor the local authorities gain anything by attempting to collect this money. The major part of the casual labourers who come under the Income Tax law are not a class of men whom, in normal circumstances, it would be right to tax at all. I defy any hon. Member opposite, and if their wives were here I would defy them too, to be thrifty and careful and saving when you do not know from one week to another what your income is going to be. There is nothing so demoralising as casual labour, and I would have thought that, now the War is over, there would be no hesitancy at all on the part of the Government in reverting to the old practice of leaving these men out. It is all very well to say that during the flush period they should save money, but there are many things to make up for that they have not had, and there is the fear of what is going to happen the next month or the next week. I do not believe hon. Members of this House, unless they have come in contact with it as social workers or as representing a district where such men are employed, realise the deadening effect of not knowing how much their income is going to be, and how it takes away from them all idea of foresight, and laying up, and so on.

As to sending them to prison, that is the most useless thing I have ever heard of. I do not want the House to think that I am continually reminding them of my own temporary sojourn in prison, but, quite honestly—and my hon. Friend the Member for South Poplar will bear me out—with the major part of the men whom we met in Brixton Prison we had a joke amongst ourselves, that we were all there for debt, and the debt really was debt to the Income Tax Commissioners. You never got the money, and, unhappily, in places like Canning Town and Poplar the local ratepayers were having to keep the wives and children of the men who were in prison. That is really an absurd method of trying to get taxes, and I would appeal to the right hon. Gentleman in charge of the Bill whether he will not agree to give this matter some reconsideration with his experts, and, if our Clause be not the right sort of Clause to meet the case, bring up another, so that the matter may be settled for good and for all. These men are, in my judgment, the victims of an evil system, which ought long ago to have been abolished, but, until its abolition, for goodness sake do not let us penalise them further by imposing this burden, which is a burden and yet not a burden. I mean that you impose it on them, but they are not able to pay, and you really put the additional burden on the community. I think it is time that that was done away with, and if the right hon. Gentleman will consider it. I think he will see that we have made a perfectly reasonable proposal.


I am somewhat in a difficulty, as I am impressed by the three hon. Members who have spoken, but I do not think they quite realise that these men to whom they have been referring—and the hon. Member for St. Helen's (Mr. Sexton) mentioned the case of a man with a wife and three children—are not liable at all unless they are earning over £6 a week. I understand, from the hon. Member for Bow and Bromley (Mr. Lansbury) that wages, unfortunately, are going down in his district, and possibly those men may no longer be liable to the tax, but, if they are earning over £6, really they ought to contribute something, some small share, to the cost of running the country. I also ought to say, as it has not been mentioned, that there is a provision for these small quarterly Income Tax payments to be made by weekly stamps, on a form which the collector will provide for them, so that it is not altogether quite as hard a case as has been put to me. Further, the difficulty does not arise unless it happens that the first quarter of the Income Tax year, from April to June, is a busy quarter. If, for instance, that quarter is a slack quarter, and the income is below that of the second quarter which is a good one, then the second good quarter is averaged with the previous bad one, so that a real difficulty can only arise where the first quarter of the Income Tax year is a big one. If the first or second quarter had been slack, and the third quarter had been big, there would be no difficulty in averaging it over the one or two previous bad quarters.


Does not the right hon. Gentleman recognise that if there was a bad quarter and debts were incurred they would more than swallow the amount in the next quarter? The man has got to pay his debts.


But Income Tax is a debt also, just as his debts for his groceries.


He does not eat Income Tax.


When you are dealing with these matters on a just basis the tax is a debt. But I wanted to see whether there is any injustice which may be remedied. I agree that there is a hardship if the first quarter is a good one and the second and third quarters are bad. I agree that it is no answer to say that the casual worker, who has paid his Income Tax on the first good quarter, and then has had two bad quarters, can get it back. Hon. Members will agree that it can be got back, but there is a hardship there. I will go into the matter and see whether it is possible to meet the point. Nobody should be taxed unless he is liable to pay, unless he has earned during the whole year, in the case of a married man with three children, more than £315 per year. But the hon. Member will realise that we must not let off the casual labourer merely because he is a casual labourer, if he is earning a big enough income to warrant him paying. This is the last stage of this Bill, but I will go into the matter with my advisers and see whether anything can be done to remedy by administrative action the case which has been put forward of the man whose income in the first quarter of the year is large, and whose income falls off then in succeeding quarters so as to reduce the total amount calculated for the year. I do not suppose that the amount involved is very heavy, particularly in view of the way in which wages, unfortunately, have fallen, but I will go into the question, and perhaps my hon. Friend will meet me and discuss it with me.

Motion and Clause, by leave, withdrawn