HC Deb 08 July 1924 vol 175 cc2027-32

"Section thirty-two of the Finance Act, 1921 (which provides for exemption of superannuation funds from Income Tax) shall have effect as though at the end of paragraph (b) in Sub-section (3) of that Section there were added the words 'or, in case of death, for their widows or children.'"—[Mr. Romeril.]

Brought up, and read the First time.


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

I am hopeful that the Chancellor of the Exchequer may see his way to accept this Clause, or, at any rate, that it will receive much support in the Committee, and that he will not resist it. Its effect is to apply the exemptions provided in the Act of 1921 in regard to superannua- tion funds, that is to say, funds for the purpose of providing a superannuation allowance to employés, to similar funds for the purpose of providing pensions for the widows and orphans of such persons. I can only conclude that it is an oversight that those same provisions have not been extended to the funds for providing pensions for widows and orphans. It is not a question in this ease of relieving the pension itself from Income Tax—that is a different question altogether—but what we are asking here is that the investments of the funds shall be relieved from Income Tax. If you impose Income Tax upon the invested funds, remembering that the money, with the exception of certain small payments made in connection with death or retirement, is kept in the funds until such time as the pension falls due to the party concerned, and if then the pension itself is made subject to Income Tax, that is all that should be required. If you charge the fund itself, on its investment, and then again charge the pension when it falls to be paid out of the fund, you are, in effect, making a double charge for Income Tax.

I suggest that if the Committee is concerned about the pensions of the widows of ex-service men, here in this case we are not asking that the pension shall be exempt—we agree that if the pension comes within the scope of the Income Tax scale it should pay the tax—but that you shall not discriminate against widows and orphans, and that you shall not treat them worse than you are treating the men. These pension funds are things to be encouraged, I think, both by this House and by the Government. They are attempts by joint efforts, on the part of employés and their employers, to provide against old age on the part of the employés themselves and also for their widows and orphans. This is a most desirable form of activity, and the State itself gains. It will not gain so much when the Chancellor's new proposals come into effect in the matter of the means disqualification for old age pensions, but even by the new proposals the State does get relief from certain obligations by the assistance of these funds.

The Colwyn Commission reported in favour generally of superannuation funds being exempt. Every argument that caused that Committee to report in favour, and caused the recommendations to be adopted, apply with equal force to this proposition that the exemption should be extended to widows and orphans There is no fear, or there need be none, that if this be carried in its present form in connection with that particular Section of the Act, of any large extension of other claims coming in, certainly not with the same force that this claim comes in connection with this existing exemption for ordinary superannuation funds. There is no fear that there would be any large and extensive claims in connection with it I put this Amendment with confidence to the House believing that it is an act of justice and reason, and that it should be carried.


The point raised by my hon. Friend is a very simple one. He proposes to exempt from tax the income which is invested by certain benefit societies. The exemption is limited to funds for the benefit of persons who have actually been employed, and the Amendment would extend the benefit to the pension received by the widows and the orphans. Under the existing law contributions by an employer for widows and orphans funds are, in ordinary circumstances, exempted from taxation. I was rather surprised to hear the doctrine from my hon. Friend that there was no distinction between contributions to benefit societies and income from investments, because—I am quite sure my hon. Friend will not dispute the statement—income from investments has always been considered by the Labour party to be very different to income from earnings. There is, too, a difference between the taxation of income from investments, and no taxation on income from contributions. There is the further point. I should like to make and it is this; that experience has shown that contributions to superannuation funds which are already in operation have really gone towards reducing the contributions which employers otherwise would pay to the funds of the societies.

There is no doubt at all that if the exemption be made for which my hon. Friend asks we really would be giving a subsidy to the employers and help to reduce their contributions to the societies. I do not agree at all with the latter part of the observations of my hon. Friend when he said that there was no danger in these extensions being made that a demand would arise for still further extensions. If these were granted then next year, on behalf of provident industrial and the ordinary insurance societies, demands, would be put forward that their investments should be exempt from taxation. We have the greatest possible sympathy with these benevolent associations, but this suggested Amendment would cost a quarter of a million, and unless I could resist it the application would be repeated, and I should very soon find its scope extended. There are a very large number of Amendments upon the Paper suggesting alterations in our Income Tax system and if these were allowed they might cost a sum of £6,000,000 or £7,000,000. It might be a good thing if the Chancellor of the Exchequer in the future could make some remission of taxation to small taxpayers, and it is probable that the claims of the small Income Tax payers will yet receive the consideration of the Treasury. Although I stand here opposing many of these Amendments, however meritorious they might be—I strongly appreciate some of their points—but I cannot afford to make the concessions.


I am sure all parties in the House will have listened with interest to the Chancellor of the Exchequer. If I understood him correctly he has stated to the House that between now and the Finance Bill of next year the claims of the small Income-Tax payers will receive consideration from the Treasury.


indicated assent.


As the Chancellor of the Exchequer stated accurately, there are a number of Amendments on the Paper to grant concessions where concessions should be granted. But I would remind the Chancellor that although the present Income-Tax law is based on the Report of the Royal Commission which sat in 1919, the policy and steps which were taken in the War period should not bind this House in the years 1924–25. I hope, therefore, that during the coming months the Chancellor may give consideration to the claims of the Amendments moved this year, and which were moved last year, to lighten the burdens on the small Income-Tax payer where the burden is heavy to-day. The Chancellor has taken up the case of the concessions which he has refused this afternoon. I listened with interest to see if he could tell the Committee the cost of the concessions, or rather the cost of the Amendments which are on the Order Paper this afternoon. It might have helped some hon. Members in the particular division, but the Chancellor of the Exchequer—and this is ray main reason in supporting the Government this afternoon—has in his Budget given relief to the indirect and poorer class of taxpayers. Last year we moved many Amendments to the Budget, because that Budget gave direct relief to the brewing industry and the consumers of beer as well as the Income-Tax payer. The concessions of the Chancellor of the Exchequer have reached right down to millions of the people, and, although Amendments may be moved this afternoon and further concessions given to these industries, I think personally the Chancellor has done well, and I support him.

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