HC Deb 08 July 1924 vol 175 cc2084-91

In charging, whether under Schedule D, the profits or gains accruing from any trade, profession, employment, or vocation, or under Schedule E, the salary, fees, wages, or profits accruing from any office of employment, any person the amount of whose earned income, as estimated in accordance with the Income Tax Acts, shall not exceed five hundred pounds, such deduction may be allowed as the Commissioners, having jurisdiction in the matter, may consider just and reasonable as representing the expenses of travelling between the residence of the taxpayer and his place of business, provided that no such deduction shall exceed the sum of twenty pounds.£[Sir J. Pennefather.]

Brought up, and read the First time.

Sir J. PENNEFATHER

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

This new Clause proposes to make an allowance for travelling expenses in the case of any person whose earned income does not exceed £500. There is a further limitation to the effect that any relief granted under this new Clause should be limited to the sum of £20 of duty in any one year. Although in that sense this proposal is a very moderate one, it is in another sense a very important one affecting a very large number of people mainly in our large cities, such as London, Liverpool, Manchester, Birmingham and places of that size.

In all these places it is difficult, if not impossible for these people to live near their place of business, and in all these cases it would apply to what we might call the 'better trade class, the -artisan class, and manual labourers, who get good wages. It would apply also to clerks, managers of small businesses, people like lady stenographers and assistants in shops, and people of that kind, who are what we might term an industrious but struggling class. To these people the acceptance of this proposal by the Government would be a very great boon. A great many of these people really cannot live near their work, and even if they could, it is not desirable in many cases that they should do so. It is far more desirable that they should live further out from the centre. Hon. Members have no doubt seen these people going to business early in the morning hours and returning in +the evening. I am going to suggest to the Chancellor of the Exchequer that really when we are considering the wages or salaries of these people, we are misleading ourselves if we confuse the actual wages or salaries which they get with their nominal wages or salaries.

I think it will be agreed on all sides that, before a man or woman can earn an income from their work at their place of business, it is necessary to reach that business, and that, having performed their daily work, it is necessary for them to get back to their homes. That being so, although the wages or the salary may be £5 a week, the actual wage or salary which the worker has in his or her pocket is not £5, but £5 less the cost of getting to the place where they earn it, and of getting back home again. I am informed that some of the General Commissioners of Income Tax take that view, and are quite disposed to allow the expenses to and from the place of business as a deduction from the salary, and tax only the actual net receipts.

In this, however, they are hampered by two very narrow legal decisions given by the High Court, one in 1887 and the other in 1890, and in the face of these decisions those General Commissioners, who desire to carry out what is suggested in this new Clause, find themselves unable to do so. If this new Clause is included in the Bill many General Commissioners would gladly avail themselves of it, and it would give them authority to carry out what they themselves believe to be right and proper. I do not profess to be a lawyer, or to be well versed in legal matters, and, therefore, I do not propose to touch upon that point, but I suggest that, since those narrow legal decisions were given, things have changed. The later of them is 24 years old, and during those 24 years our great cities have grown in size geographically, and it is more and more necessary for people to go out and live in the outskirts. In many cases the houses in which people formerly lived have been demolished, and great business premises have been put up, and people are compelled by force of circumstances to-day, to a degree which was not the case 25 or 30 years ago, to incur these travelling expenses.

It is not a question of a man electing to live at Southend or at. Brighton and travel first class to the City of London. People of that kind have more than £500 a year, and they could not pay such railway fares under the limit of £20 which is suggested. This is simply a matter for struggling men and women of very moderate means indeed, and it would just make this difference to them that, in runny cases, if this Clause were accepted, they would, perhaps, if they were living too close to the town to-day, be able to move out a little, or, if they were living on the outskirts, to go, perhaps, a little further still. That moans much, not only to the wage-earners themselves, but also to their wives and families, and it means much to the health of the rising generation. For all these reasons I urge upon the Chancellor of the Exchequer that he should, for once, give away something and make this concession. I assure him that. I am not moving it with any desire to wreck or spoil his Budget. I have refrained from taking part in several Divisions to-day, which shows that I do not desire to wreck his Budget, but I put this forward as a real, up-to-date contribution to the amenities of life and the well-being of a large class of very deserving people in constituencies like my own particularly, and in the large cities of this country.

Mr. TURNER

I want to appeal to the Chancellor of the Exchequer to accept this proposal. In the great county of which he is a distinguished son, and one of the divisions of which he represents, a very considerable amount of travelling has to be done by workpeople going from the other side of the Pennine Range into the Colne Valley, and a very large amount of travelling has to be done by many of the work people in the industry with which I am connected in the West Riding. Again, this morning, when I caught the 7.40 train from home, I found several compartments crowded with people who have to travel six or eight miles every morning and return every night. That means a weekly charge of 3s., 5s. or 6s., and it is a tax upon the income which they earn by their labour. This is a question which has arisen within the last few years. Formerly, travelling did not trouble these people in connection with the question of Income Tax, but latterly it has arisen. This is a regular annual charge upon those who pay Income Tax, and, as Income Tax payers are more numerous to-day than they were a few years ago, owing to the changes that have been made, I appeal to the Chancellor of the Exchequer to bend a bit on this occasion, and see if he cannot just meet the case of these struggling industrial people. It is suggested that the concession be limited to incomes under £500, and shall not amount to more than £20. It seems to me, therefore, that it is one of those little easements that would mean a great deal to many workpeople, and I hope the right hon. Gentleman will accede to this request.

Mr. SNOWDEN

I think that my hon. Friend who has just sat down has not very clearly grasped how this proposal would operate. He spoke of the number of workpeople who crowded into the compartment this morning in which he himself was journeying to London. I wonder how many of the workmen who were travelling in that train—

Mr. TURNER

I was travelling third class.

Mr. SNOWDEN

I wonder how many of those who were the companions of my hon. Friend this morning were liable to Income Tax. I venture to say that there was not a single one.

Mr. TURNER

Oh, yes!

Mr. SNOWDEN

It has to be remembered that a married man with an average family has to have an income of about £400 a year before he is liable to pay a single penny of Income Tax. I am quite certain that not one of those operatives who journey from one part of the Colne Valley to another every day has an income of £8 a week. No one knows better than my hon. Friend that wages of £8 a week are not earned now in the worsted factories of the West Riding, and, therefore, the people for whom my hon. Friend speaks would not be affected at all, and would not gain a single penny of benefit if this concession were granted. It is one of those proposals in favour of which a somewhat plausible case can be made, but, when we come to examine it, we find that there is very little substance and reality in the arguments which have been put forward. The Royal Commission on Income Tax very carefully investigated this question, and they were definite and unanimous in their Report on the matter. They came down unanimously and strongly against any allowance being made on account of travelling expenses in assessing Income Tax. The paragraph in their Report which deals with this matter is a short one, and I will trouble the Committee to hear it. They say: Travelling expenses incurred by a taxpayer in going from his place of residence to his business should not, in our view, be allowed. The question of travelling expenses is one which reacts on other private expenses, such as the expenditure for rent and rates. It is more truly an expenditure or disposal of income than an expense essentially necessary to earn the income. We are of opinion that a general allowance for travelling expenses would result in very grave inequality. The Mover of the Clause referred to the increasing and very commendable desire of workpeople to get away from our crowded industrial centres into purer and healthier air, but I would remind him that, by the operation of economic laws, rent and rates are higher where accommodation is most dense, and it is a fact within the knowledge of every member of the Committee that, as a general thing, the difference between the expense a person has to incur in travelling to a place some miles from where he works, and the extra rent that he would have to pay if he lived near his work, makes him quite as well off, and in a great many cases better off, through living a considerable distance away. Coming to the practical operation of this proposal, it is suggested that the allowance for travelling expenses should be confined to those who have an earned income not exceeding £500 a year. Let us see how that would operate. A person with an income of £500 a year would be able to get an allowance of £20, but a person with an income of£501 would not be able to get a single penny. May I, further, point out a result of limiting it to earned income? Take the case of one of those season-ticket holders between London and Brighton. A man has an unearned income of £2,000 a year. He is a director of a company in London and travels up once a week, say, to a directors' meeting. His directors' fees amount, say, to £150 a year. That is earned income, and although that man would have an income of £2,150 he would be able to claim full travelling allowance up to £20 a year, because the Clause is confined to earned income, whereas a man who has an earned income of just over £500 would not get a single penny.

9.0 P.M.

A further point. The hon. Member laid very great stress on the fact that these travelling expenses were necessarily incurred by a man in the discharge of his occupation. But has he thought where it is going to lead? If a man lives a considerable distance from his work he has got to keep himself between arriving at the place where his work is and leaving it at night. He incurs considerable expense, and quite as strong a case could be made out for giving an allowance for meals, or sustenance; during the working day as can be made out in favour of giving him an allowance for travelling expenses. This proposal strikes at the whole structure of the Income Tax law. Hon. Members who are moving this and other Amendments do not seem to realise that we must have a certain amount of revenue, and if we cannot get it in one way we must get it in another. If I were to concede this, I should have to find some compensation for the revenue I am surrendering. I should have to get it either from these same people or from someone else, and if I put it on someone else I should simply be relieving these people of an amount of taxation and placing it on other people who are no better, and in many cases far less able to pay it. The kind of people who will be benefited by this Clause are not the people of very small means to whom the hon. Member has more than once referred, because a married man with an average family would require an income of £400 before he pays a single penny of Income Tax. The people who would benefit, the people between £300 and £500 a year, are no doubt in nearly every case living in houses which were liable to Inhabited House Duty. I am giving these people a very considerable relief of anything from £2 up to £5 a year. Really I cannot afford more. I am sure the hon. Member has no idea of the cost. As a matter of fact it would cost £1,000,000 a year.For these reasons, because I do not believe it is a sound thing to do, it is quite incon- sistent with the general structure of our Income Tax law, and if it were conceded it would involve the imposition of additional taxation upon other people, and the cost would be £1,000,000 a year, I am sorry I cannot accept it.

Sir J. PENNEFATHER

I should like to correct the Chancellor in regard to a statement he made about the wording of the Clause. I am sure he would not desire to mislead the Committee, but the objections he has put forward are groundless. The Commissioners would not consider it just and reasonable for a man coming up once a week from Brighton to attend a directors' meeting to claim it. The Clause is carefully worded and it meets many of the right hon. Gentleman's objections.

Mr. SNOWDEN

The hon. Member is quite wrong. I have not to consider what view the Commissioners might take. I have to consider the words of the Clause, and there is no doubt whatever that under his wording the man would be entitled in law to claim £20 a year.

Mr. REMER

I should not have risen if it had not been for the hypothetical case the right hon. Gentleman has quoted. There are two points of view I should like to put before him upon that hypothetical case. The first is that a director living at Brighton could not come within the £20 limit because his railway travelling would be a great deal more than £20. The second thing is that I think a man living at Brighton coming up once a week to London under the present Income Tax laws is allowed his deduction in exactly the same way as Members of Parliament.

Mr. SNOWDEN

The hon. Member is quite wrong. Travelling expenses are only allowed now when a man has, in connection with a single employment, to travel from one place of business to another.

Mr. REMER

My second point, of course, falls to the ground, but I was going to refer to the question of Parliamentary salaries, because I think the smaller Income Tax payer has felt a very grave injustice that Members of Parliament are able to get this deduction while he is not. In many cases it is not a matter of mere convenience or being able to get cheaper houses that people live a long distance away from their business. It is more often than not because they cannot get houses anywhere else. If you take London, typists and that class of people are utterly unable to find either rooms or houses within a considerable distance of their place of business. On these grounds I hope, at any rate, we shall have some more encouragement than the right hon. Gentleman has given us. I think the young girl who has to come to the City as a stenographer, especially when she has no parents and has to provide her own living, is the class of person who would benefit under the Clause. I know one who does pay Income Tax, and who has to travel a considerable distance night and morning at considerable expense. It is utterly impossible for her to obtain any place of residence within easy distance of her place of business. Therefore, I would press upon the Chancellor of the Exchequer that this concession would be very favourably considered by a very large number of people, and I hope he will reconsider his decision.

Question, "That the Clause be read a Second time" put, and negatived.

The following new Clause stood on the Order Paper in the name of Mr. S. ROBERTS.