RATE OF INCOME TAX TO BE REPAID IN RESPECT OF DEDUCTION OR ALLOWANCE UNDER PART II OF FINANCE ACT, 1920.

HC Deb 12 May 1924 vol 173 cc1024-110

10. "That any repayment of Income Tax for any year of assessment, whether ending before or after the thirtieth day of April, nineteen hundred and twenty-four, to which any person may be entitled in respect of any deduction allowed for the purpose of ascertaining the amount of his taxable income or in respect of the reduction of the rate of tax on the first two hundred and twenty-five pounds of his taxable income, shall be made at the standard rate of tax for that year, or at half that rate, as the case may be, but subject to such adjustments as may be proper in cases where relief is given in respect of Dominion Income Tax:

Provided that, in the case of any person who proves that by reason of the deductions to which he is entitled he has no taxable income for any year, any repayment to be made shall be a repayment of the whole amount of the tax paid by him, whether by deduction or otherwise, in respect of his income for that year.

And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

Fifth Resolution read a Second time.

Sir WALTER de FRECE

I beg to move, in line 2, to leave out the words "second day of June," and to insert instead thereof the words "first day of October."

In moving this Amendment, I can claim to hurt nobody's feelings; in fact, my apparent nervousness is because I may be looked upon as a public benefactor. All I propose to do is to continue the tax until the 1st October next, and then abolish it. If my pro- posal be accepted by the Chancellor of the Exchequer, I claim, in the first place, the Government will this year get all the money they want, all the money that is budgeted for. The Government will have the benefit of the tax on the forthcoming Test Matches, the receipts of the Wembley Exhibition, the influx of visitors from abroad who will naturally patronise the many entertainments in London and the Provinces, and, I am informed, we shall also have a good deal of racing in the next few months. In the next place, the entertainment industry will get what it wants—namely, abolition, and I am sure it will be quite content to carry on at the present rate of taxation, providing it can get a definite promise of abolition during the last six months of the financial year. My Amendment, therefore, benefits everybody, and not merely, as the Government proposes, the very cheapest cinemas. In the third place, I hurt the feelings of no political party, since who can say which party will be in power to introduce the next Budget? In the fourth place, I recommend the step on the ground of mere justice. In the fifth place—and this is important—I enable the rank and file of my friends of the Labour party to carry out their promise. Indeed, I do more: I enable them to carry out their written pledges—written not once, but several times. The House will remember it was a source of constant criticism by the Labour party that the last Government would not abolish the tax, and would not even accept the graduated scale of taxation which I then proposed. The objections made then by the Labour party must be just as strong to-day. Last year they even stampeded a meeting upstairs in a committee room called to approve a scale. Their cry then was, Abolition, Abolition, and nothing but Abolition. I do not think for a moment they have changed their minds, but I would like to quote two extracts from prominent Labour Members' speeches on this very subject when I introduced my scale last year. The hon. and gallant Member for S.E. Leeds (Captain O'Grady) said: We on these benches favour total abolition of the tax. We agreed during the General Election that in our judgment this is a particularly vicious tax. Then the hon. Member for Govan (Mr. N. Maclean) said: I have given my pledge to my constituents that I would move as far as I could, not for a remission of the tax, but for its abolition, and as far as one Member of Parliament can go, I am going to continue fighting for the abolition of this tax. I admire that attitude, and I hope they will put it into practice.

Mr. N. MACLEAN

Why did you not support us last year?

Sir W. de FRECE

I will come to that later. Their argument is just as reasonable to-day, and I hope they will carry it out. I am anxious to see how many Members of the Labour party are prepared to vote against the Government in their proposals, which, admittedly, are of the most miserable kind. Finally, I do away with a War tax, which, to my mind, and I am sure to the minds of other hon. Members, has nothing to recommend it. It is a source of surprise to me to hear sometimes, even from Members on this side of the House, that the entertainment business has no claim to be called a great industry. May I emphasise, the fact that in addition to the thousands of actors, actresses and musicians employed by this industry, it also gives constant and remunerative employment to painters, carpenters, stage-hands, electricians, printers, bill-posters, advertisers and others too numerous to mention. Again, there are many people who claim that entertainment is a luxury. I notice the right hon. Member for West Birmingham (Mr. A. Chamberlain), who, I am sorry, is not now in the House, said in a speech quite recently: He was less pleased with the changes in the Entertainment Tax. After all, taxes there must be, and attendance at entertainments, whether in cinemas or on the football field, was a luxury, if any expenditure was a luxury. If they were not to tax food, or the necessities of life, or if they reduced these taxes to the lowest possible limit, surely it was a little unwise to impinge on a source of revenue where no one could say that a man who could not afford to pay was asked for a penny. I have yet to learn that the House has accepted the principle of luxury taxation. I understand a Select Committee rejected the principle. Does the right hon. Member for West Birmingham agree that luxuries should be taxed? Did he ever buy an orchid, or go into a jeweller's shop, or patronise the West End shops? I think it is time we did away with this foolish talk about luxuries. When there is a war or social disturbance, do the Government then talk about entertainment as a luxury? No. From my personal experience, they ask us to carry on at all costs. What is a luxury? Does one consider it a luxury to encourage dramatic art? To hear Shakespeare? To listen to the great musicians? To promote a Wembley Exhibition, to interest children in the life of the world and nature? Surely to talk about luxuries in this connection is foolish! The hon. Member for West Birmingham (Mr. A. Chamberlain) enunciates a code of life that would make us cabbages. I hope the Members of the Labour party do not propose to join the hon. Member for West Birmingham, and to take an attitude which reminds one of the lines: Compound for sins they are inclined to, By damning those they have no mind to. I have only dealt with remarks of the right hon. Gentleman because there are some who consider that entertainments and diversions are luxuries. If that is so, why do doctors recommend them? Why do the teachers encourage them? Why do any of us try to encourage them in an educational sense? There are many hundreds of thousands of workers affected by this tax. I do not want to go over the whole ground again, but if we are to penalise men who labour in the so-called luxury industries, well, surely, we ought to tax those who work in Birmingham cheap jewellery and things of that sort, for they only labour for what might be termed the physical side. Entertainments as an industry cater for the moral and educational side of life.

In previous years I have only advocated a reduced scale. I did so from the point of view of finance, which, for the moment, I did not think justified any other course, but with our large surplus now, I claim we ought to abolish the tax altogether. I know the Chancellor of the Exchequer himself is sympathetic, because he once said as much, and the late Prime Minister said that this tax ought to be the first to be dealt with as soon as the Government had sufficient money at its disposal. I go further and say we might well postpone some remission of pre-War taxation, and wipe this taxation out altogether at the present time. I am in favour of increasing employment by abolishing this tax. You will give employment to thousands more in an industry which is already very sorely tried by summer-time, by broadcasting. [HON. MEMBERS: "Oh!"] Yes, it is a fact. From the public standpoint, I would say that the public will get the money from this tax back again in better seats and cheaper seats. They will get it back, but they will not get it back from the Government.

The present suggestion is a miserable concession on the part of the Government. It will not assist anybody. I am in favour of returning this concession to the public. If there is a concession made, let it go direct to the public. I would impress upon hon. Members that you can only do that by declining to penalise the higher priced seats which alone make cheaper seats possible. [An HON. MEMBER: "It is the other way about!"] No, the hon. Member is wrong. I do not know what his experience is, but from my experience of 30 years, the proposal is one that will subsidise outdoor entertainments at the expense of inside entertainments, and I will tell him why. The ordinary charge for an outdoor sports meeting at one time was 6d. When the tax was put on there was imposed another 2d., making 8d. The charge was made 1s., because it was impossible for the money-takers to deal with thousands of people, and to give them 4d. change out of 1s. Now the position is even worse, because I notice that in one part of the tax is speaks about 1½d. being added to the price of admission.

Has the Chancellor of the Exchequer ever stood at a theatre or a music hall where the house has to be filled 10 minutes before the starting time? In such a case it is absolutely impossible for any money-taker to give change for the fraction of a penny out of a shilling. Much as I agree with outdoor sports, they have no relation to the encouragement or the promotion of dramatic art or musical art. My proposal means that the Government will get the money they want and everybody will be satisfied. If we can get abolition, hon. Members will be able to honour their pledges. Last, but not least, the public will benefit. I hope, therefore, the Chancellor will accept what I have put forward, for I fail to see why he should not.

Sir ALFRED BUTT

I beg to second the Amendment.

I think the House will agree that this is a thoroughly unsound tax, and one which was never intended should be maintained. Unlike my hon. Friend who has proposed the Amendment, I have hitherto not put down any Amendment on the Paper to the Entertainments Duty, not because, hon. Members know, I am not very much interested in the entertainment industry, but because I always took the view that whilst this was an extremely unfair tax, there were other taxes that pressed much more heavily upon the community, and which should first be remitted. I have been accounted somewhat of a blackleg in the profession to which I belong, and as is known in my constituency, last election I had others advocating—unsuccessfully, I am glad to say—my opponent's cause. The position to-day is very different. The Chancellor of the Exchequer has come to the House and has frankly stated, "I feel that I can afford a remission of £3,400,000 this year and £4,000,000 in subsequent years." Upon examination of his proposals I have definitely—and speaking with due modesty, I hope, and a great deal of experience—come to the conclusion that what he proposes will do far more harm than good and injure the amusements industry in this country.

Secondly, it will not benefit the consumer except in a very minor degree. Thirdly, and lastly, the Chancellor of the Exchequer will lose £4,000,000 in a full year through that course being taken. I felt compelled to put down an Amendment which substantially is the same as that of my hon. Friend. Hence I support his Amendment. The entertainment industry is undoubtedly at the present time subsidising the cheaper seats in all places of amusement. It would be impossible for any indoor amusement industry to be carried on without they had higher-priced seats which pay, in fact, for some portion of the upkeep of the cheaper-priced seats. What is going to happen? What will happen from the proposal of the Chancellor of the Exchequer, if it is accepted by this House, is that in fact the scale is again going to subsidise the cheaper-priced seats at the expense of the higher-priced ones, and it will mean that cinemas will be at a still greater advantage than at the present time over the rest of the entertainment people.

I do not know whether the Chancellor of the Exchequer is anxious by this Bud- get to put as many people out of employment as he can, but I do say to him deliberately that what he is now proposing to do is further to subsidise the cinema which employs the minimum amount of labour, and which buys the things it sells principally from America and foreign countries, and, therefore adversely affects the exchange, and is competing with the theatre and music hall which employs the maximum number of people in the entertainment industry. May I just give a concrete example? The cinema will employ perhaps two people on the stage, a very small orchestra, or pianola, or some mechanical instrument for its orchestra. It will buy the goods it is selling principally from America or from the Continent. Its expenses in comparison with the theatre or the music hall are very much less. If you take a music hall or a theatre what do they do? They have a large staff on the stage, one for which the Chancellor of the Exchequer professes to be anxious to find work, and they are drawn very largely from unskilled labour. They will employ 20, 30 or even more people on the stage. They will employ in the orchestra anything from 10 to 20 people. They will employ on the stage itself a very large number of actors and actresses, supers, and people drawn from the unemployed, and lastly, they will spend varying amounts and sometimes very considerable sums in the productions they present to their audience. All that radiates through a large number of trades, and if you are going to subsidise the cheaper priced seats you are going to make it more difficult for the music halls and theatres to compete with the cinemas, and you will force them to lower the standard of their entertainment and cheapen their cost in order to compete with these other people.

Is the explanation of this proposal that the Chancellor of the Exchequer is out for catching the votes of the cinema patrons? I am extremely sorry to introduce any note regarding vote catching into this discussion, but I deplore the fact that if the Chancellor of the Exchequer had not this in mind, at all events that is the interpretation put upon it by the cinema industry. I would like to refer to a letter which I have received as a Member of the House of Commons, and it is written by Mr. J. V. Bryson, the managing director of the Jewel Productions European Motor Picture Company, Limited. Among the directors I find on the notepaper there are three Americans, and the managing director is an American. I do not want to read the whole of the letter, but it was written on the 14th April, and the managing director says: To-day, authentic assurance has reached me that the theatre admission tax will soon be greatly reduced by, and at the expense of, the British Government.

Mr. SNOWDEN

My hon. Friend the Financial Secretary to the Treasury will reply to this Amendment, but I should like to state at this stage that the hon. Member is apparently not aware that the right hon. Gentleman the Member for West Birmingham (Mr. Austen Chamberlain) raised this very question, and I stated in reply that there was no foundation whatever for the statement which has just been made.

Mr. MACLEAN

Is the hon. Gentleman aware that the man who signed that letter has apologised for using the letter, because the person who gave him the information had no authority to speak on the subject, and carries no weight in the industry?

Sir A. BUTT

I was aware that the Chancellor of the Exchequer had denied all knowledge of this letter, but that does not alter the point I was endeavouring to make, which is that while I do not accuse the Chancellor of the Exchequer of having had any knowledge of this letter, it clearly shows what was the idea of the cinema proprietors in this country, and that is why I want to quote the letter. I am quite prepared to accept the right hon. Gentleman's statement that there was no authority for it. Here is the quotation— What are we going to do to show our appreciation of the actions of those men who have answered our plea for the reduced tax? Those men who answered that plea are obviously the Labour Government. In this case they did a very laudable thing. They sent round to these 4,000 cinema people and asked them to advertise the Wembley Exhibition. While these 4,000 people are advertising that exhibition there is no reason to suppose that in future they will not advertise those who subsidise them against British labour. The Chancellor of the Exchequer thinks that in reducing the tax by the scale he has adopted that he is going to benefit the consumer. Does he imagine that for one moment the seats that are now being sold at 3d. inclusive of tax, that is 2½d. for the proprietor and ½d. for the tax, will in future be sold at 2½d.? Because if he does, I can assure him that he is labouring under a great misapprehension because the consumer will not get the slightest benefit, and the ½d. will go into the pockets of the proprietors.

Let me give him a concrete case. Does the right hon. Gentleman imagine that when this tax is reduced under the scale that the present admission to Football League matches will be 11d.? [HON. MEMBERS: "Yes!"] At the present moment what happens in practice is that the football organisers take 9d., the Chancellor gets 3d., and the 40,000 patrons who pay admission to a successful football match pay 1s. each. Does the right hon. Gentleman think that those 40,000 people are going to pay 11d. in the future and get 1d. change? Does he think that is at all practical in working? I assure him that it is not practical, and I may tell him that I am perfectly convinced that what will happen will be that the football promoters will take 10d. and he will get 2d., and the consumer will get no benefit. Are operas, concerts and entertainments of that kind not to be considered, because they are very seriously handicapped at the present moment? What is proposed now will handicap them further. It has been said that this is a luxury industry. I do not know whether it is or not; I am not going to give an opinion on that; but, if I wanted to appeal to the sentiment and gain the sympathy of the Committee, I should tell them of an experience I had in 1917 when Sir George Cave was Home Secretary.

At that time we were having constant air raids, and the theatres were virtually empty. I went to see Sir George Cave about the very precarious condition of the theatres and music halls in this country, and he expressed to me, on behalf of the Government of the day, the desire that they should carry on. I make no boast about this, but I went back to a meeting of theatrical managers, and, without hesitation, they all said they were most anxious to carry on. They did carry on, and they lost many thousands of pounds; and I may say they have never recovered from that, because—and this is a point that I should like hon. Members seriously to consider—they cannot sell to-morrow the goods that they do not sell to-day. If tea or sugar is taxed, and the shopkeeper or merchant cannot sell his goods to-day, he can always hope to sell them tomorrow; but the unoccupied seats in a place of entertainment that are not sold to-night are lost for ever. Therefore, I say there is a great case for a concession to the West End theatres, and the higher class form of entertainment in this country. Let me mention to the Chancellor of Exchequer a great example, namely, promenade concerts. They have a great uplifting effect upon the community, which I hope he will be able to realise. In the worst of us there is some good. Does he know that last year, in London alone, the Chappell Concerts paid £40,000 in tax, and lost a very large sum of money? I am not one of those who believe that, if the tax is abolished altogether, it will mean that an industry which is so hard hit is going to become prosperous immediately; but I do say that the psychological effect of giving something to everyone will be very beneficial to the industry.

An hon. Member opposite says, "Vote-catching." I have been fearless from the first over this. I have had the courage to say that I preferred taking the taxes off sugar and tea, and I have refused to join any association or league for the abolition of this tax. I have consistently said that other things were more urgent. I am only urging this on the Chancellor of the Exchequer this year because he has deliberately set aside £4,000,000 for the purpose of doing what the hon. Member behind him calls vote-catching, and I say that it is extremely unfair and a great injustice to the industry, and that it means subsidising the foreigner at the expense of the Britisher. I know the Chancellor of the Exchequer is very firm on giving this abolition up to 6d. I have no doubt, from what I have heard, that he is perfectly prepared to say that the scale can be altered, but, as far as I can gather from the figures, £8,000,000 is collected up to 2s., and it is not unreasonable to assume that the largest proportion of that comes upon the seats up to 1s. 3d. If, therefore, we assume that £4,000,000 is the figure up to 1s. 3d., I am inclined to think that, if the Chancellor of the Exchequer insists upon abolishing the tax up to 6d., there will be very little left over to divide, and I do hope that he will not add insult to injury by offering us on this occasion what is left after the tax up to 6d. is taken away from the £4,000,000. The Chancellor of the Exchequer himself—I hope I am not unfairly paraphrasing what he has said—has said that this was a mean tax. All I can say is that what he proposes to do now is a much meaner action.

Last year, when tea and sugar had not been relieved, there were no less than 124 Members of the party opposite who pledged themselves to the abolition of this tax. Hon. Members below the Gangway pledged themselves, and many hon. Members on this side. If we on this side are to be reminded of our pledges—and, I think, it is very proper that we should be—I make no excuse for reminding hon. Members opposite of their pledges. I have taken the trouble to ascertain how the present Government voted last year. The Chancellor of the Exchequer himself supported total abolition. The Financial Secretary supported total abolition. The Prime Minister supported total abolition. The Minister of Health, the Secretary of State for War, and the Colonial Secretary supported total abolition. These Gentlemen have all been to their constituencies, and have won a very large number of votes, because they had not the courage to say what I said, namely, that I would not give any unqualified pledge. I am anxious to know what they are going to do on this occasion. I am perfectly satisfied, speaking with an intimate knowledge of the indoor amusement industry, that, if the Chancellor cannot see his way to take the tax off equally throughout the scale, as, for instance, by an all-round 10 per cent. flat-rate on the receipts, which would not absorb £4,000,000, it would be very much better to keep the tax on in its entirety this year, and, if he has £4,000,000 to spare, let us have universal penny postage, which, at all events, would be an advantage to the whole community and not only to one class.

Mr. PATRICK COLLINS

I congratulate the Chancellor of the Exchequer on his proposal with regard to this tax. This tax bears very hardly upon working people. To-day, if a person takes a 6d. seat, he has to pay 2d. in tax. If he takes a 2d. seat, he has to pay ½d., or, if he takes a 5d. seat, he has to pay 1d. This tax has crushed the small cinema proprietors and the poor showmen of England. Throughout all parts of England we take our entertainments to the countryside, and we give the masses innocent amusement. They cannot afford to pay this tax, and I again congratulate the Chancellor on what he has done. It is all very well for the luxurious theatres to play the part of the dog in the manger, because they have not got what they wanted. I myself would like to see the whole of the tax abolished, but we are thankful for small mercies. Last year also I spoke on this subject of the abolition of the tax on the cheaper seats, and I am glad that it has now come to pass. Three parts of the small cinemas throughout England are in a very bad way. Some are bankrupt, some have closed down, and others are on the verge of bankruptcy. This is a big windfall for those who go to the cinemas, and who cannot afford to give this 2d. When the father of a family takes six people to the cinema there is 2d. tax for each of them. Wages are so low that they cannot go. Reference has been made to the luxury tax on cinemas and football Football is a national game, surely. Where are people to go if they do not go to cinemas and football? I suppose they are to be put in a pen and kept there. Over £10,000,000 are invested in our industry. The showmen of this country cater for the poorer classes. They have amusement brought to their very door. They cannot go to Blackpool or to the Continent or to the Riviera. They have not got the money. I pray of the Chancellor of the Exchequer not to take notice of hon. Members opposite. I am surprised at the hon. Member for Ashton-under-Lyne (Sir W. de Frece). He has been one of our great showmen. He wishes to put the clock back. He says, "Wait till next October." I do not think for a moment that he means to put a stop to small bazaars and little cricket matches. I should like to see the tax abolished, but we are thankful for small mercies. Next year the right hon. Gentleman may be able to abolish it, but for the present I can say, speaking for all the showmen who cater for the masses, that we are thankful for what he has done.

Mr. MACLEAN

I have spoken on this question of the Entertainments Duty since I took any part in Budget discussions. I have always advocated its abolition and I still advocate it. The hon. Member for Ashton-under-Lyne (Sir W. de Frece) made a quotation from a speech I made last year and also made reference to a certain attitude which was taken up by hon. Members who sit upon these benches now, but last year were sitting across the Floor when the hon. Member was sitting upon the benches below the Gangway. My views with regard to this tax are as strong to-day as they were last year. That does not mean, however, that I am going to support his Amendment. I have been sufficiently long in this House to know the little tricks that are played when a party is in Opposition and when it is in power. The moving spirits of the meeting upstairs last year were men who were in his own political camp—the man who took the chair at that meeting, the men who had organised it, the men who took the principal part in the discussion—and we all know what happened in the evening. While at that meeting they pledged themselves religiously and seriously, with a fanaticism which was almost characteristic of the old Crusader days, when they came down into the Chamber and the Chancellor of the Exchequer told them that any member of his party who walked into the Lobby against his proposals would be violating party loyalty, everyone of them voted with the Government.

Sir W. de FRECE

Does that statement refer to myself?

Mr. MACLEAN

I understand that the hon. Gentleman voted against the abolition of the tax.

Sir W. de FRECE

I did not vote at all.

9.0 P.M.

Mr. MACLEAN

There are only two lobbies in the House and if an hon. Member does not express himself in one or the other, if he is not absent through ill-health or for business reasons, if he is in the Chamber and does not take the trouble to vote, his constituents and those associated with him must place some construction on his refusal to go into the Lobby.

Sir W. de FRECE

I explained last year that I was not in favour of total abolition.

Mr. MACLEAN

But the hon. Member did not vote against total abolition. He had an Amendment asking for a revised scale of roughly 12½ per cent. upon all seats. He had not the approval of the whole of the entertainments industry in moving that Amendment. He has not the approval of the entertainments industry in moving his present Amendment.

Sir W. de FRECE

I agree.

Mr. MACLEAN

This is not a matter on which the entertainments industry is finding fault with the Chancellor's proposal, but it is one which a few West End managers who have only a very few cheap scats are refusing to accept.

Sir A. BUTT

That is not a true statement. The Chancellor of the Exchequer will tell you differently from that.

Mr. DEPUTY-SPEAKER (Mr. Robert Young)

The hon. Member should know that he must not rise if the hon. Member does not give way.

Mr. MACLEAN

I do not want to misrepresent the position of the hon. Gentleman or of the West End managers. In many of the West End theatres the gallery seats are few in number in comparison with the other parts of the house and, consequently, a reduction in the cheaper seats is not going to be so beneficial to them as a reduction in the higher priced seats. That goes without any argument whatever, and the hon. Member for Ashton-under-Lyne admits my point. Then why are they objecting? Why are they asking that the Entertainments Duty should be continued until October of this year? Are they not aware that the concession which has been made by the Government will come into operation during the summer-time, when we hope for the ordinary good weather? Hope springs eternal in the human breast. The remission upon the cheaper seats is going to benefit cinema theatres, which appeal to the majority of the people who go to entertainments.

Sir W. de FRECE

indicated dissent.

Mr. MACLEAN

Are those of us who are in favour of the total abolition of the duty to refuse the concession because 30 or 40 theatres in the West End are not going to have a revision? Is every cinema house and every cheap theatre in the United Kingdom to be penalised because 30 or 40 theatres in one part of London, the West End, are not going to reap any great benefit from it? That is what one would call cutting off one's nose to spite one's face. The industry is to have no concession or to reap any advantage and the public are to have no advantage, simply because 30 or 40 theatres in London are not reaping any advantage. It is one of the most absurd proposals that has ever come from the representative of an industry in this House. One point which was made by the hon. Member for Ashton-under-Lyne, supported by the hon. Member for Balham and Tooting (Sir A. Butt), was that the public would derive no benefit from this remission. Upon whose authority do they make that statement?

Sir A. BUTT

I said that, to a large extent, the consumers were not going to benefit. My authority is the very large number of people with whom I associate throughout the industry, and not, as the hon. Member suggests, a limited number of 40 West End theatres, but people in the provinces, where I have interests quite as much as in London.

Mr. MACLEAN

Those of us who are not interested in the entertainment industry have an opportunity of coming into touch with managers and proprietors, and I can say, without any fear of challenge from the other side, that, as far as the cheaper-priced cinemas in Glasgow are concerned, the concession which is being given by the Chancellor of the Exchequer will be handed to the people by reducing the prices of the seats. Therefore, I am certain that as this is not limited to Glasgow, the same concession will be handed to the public throughout the United Kingdom by the majority of managers and proprietors of cinemas. That disposes of the idea that is being circulated by the hon. Members opposite that this concession will merely be something that will remain in the hands of the cinema proprietors as enhanced profit.

I am still in favour of the total abolition of the duty, and I hope we shall see the total abolition in the next Budget. If I did not think so, I would support the hon. Member for Ashton-under-Lyne in seeking total abolition now, or at some date this year. But I do not believe that his Amendment will carry out the purpose that he has in view, and to which we have converted him this year. The Chancellor of the Exchequer must give a concession to the extent of the money that he has to spare. My reason for insisting upon abolition all along was, that it was a bad tax, and that the Governments in the past had money with which they could have conceded the total abolition of the tax. They had ample money in their hands, and they could have given a concession to the cinema industry or to the entertainment industry as a whole during the last five years, but they did not do so. Concessions were given to other interests. While a concession, affecting a large proportion of workers, was withheld, concessions were given to industries that could very well have done with fewer concessions, or a lesser amount I am hoping that the £3,300,000 concession which the Chancellor of the Exchequer is giving to the industry on this occasion, or £4,000,000 in a full year, will next year, if the Chancellor of the Exchequer succeeds in his Budget, be followed by the abolition of the tax.

My main reason for not supporting the hon. Member for Ashton-under-Lyne, who has spread his trap in order to try to collect into it all those who are in favour of total abolition, is that the cinema industry, the C.E.A., is prepared to accept the concession that is being granted this year. They hoped that it would have been greater, but they are thankful for small mercies and are hoping that next year there will be greater mercy and that the tax will be abolished altogether. The point is that this year the industry are prepared to accept the concession.

Sir W. de FRECE

indicated dissent.

Mr. MACLEAN

The hon. Member for Ashton-under-Lyne shakes his head. He knows that they are accepting it.

Sir W. de FRECE

The cinema industry.

Mr. MACLEAN

That is what I said.

Sir W. de FRECE

You said the industry.

Mr. MACLEAN

I said the cinema industry. If you take the theatres in the United Kingdom and the cinemas and calculate the number of employés of all kinds, it will be found that there is a greater number of employés engaged in the cinema industry than in the theatres

Sir A. BUTT

Nothing like it.

Mr. MACLEAN

It is rather remarkable that neither of the two hon. Members who moved and seconded the Amendment, both of whom are directly interested—

Sir W. de FRECE

I am not interested at all.

Mr. MACLEAN

You were interested, and you still have a platonic interest. I mean that you had knowledge of the industry in the past, and that ought to have enabled you to give the figures showing that the theatre industry has the biggest number of employés. The figures are obtainable. The fact that no figures have been produced by the Mover or Seconder is sufficient to show me that there is something wanting in their case.

Brigadier-General Sir HENRY CROFT

Will the hon. Member give the figures?

Mr. MACLEAN

I do not think the hon. and gallant Member would accept the figures if I did give them. I notice that he has removed from below the Gangway to a seat next to the hon. Member for Balham and Tooting. Perhaps he will get the figures from his hon. Friend.

Mr. BECKER

You do not know them.

Mr. MACLEAN

I do not say that I do. Does the hon. Member for Richmond (Mr. Becker) know them?

Mr. BECKER

No, and I do not pretend that I do.

Mr. MACLEAN

Then sit down. If the hon. Member wants figures, he can get them, or I can get them for him. I made a statement, and it has not been challenged.

Sir W. de FRECE

I challenged it.

Sir A. BUTT

I challenged it.

Mr. MACLEAN

The two hon. Members have not produced the figures. If hon. Members opposite are in favour of the total abolition of the duty, I hope they will go in the Lobby to-night, and we shall keep them to that pledge when we bring forward total abolition next year.

Sir A. BUTT

Come with us.

Mr. MACLEAN

Not to-night to the West End theatres. I want to see all the Entertainments Duties, including those on theatres and sports, removed. I do not mean those entertainments which the hon. Member opposite frequents, and which seem to give him some amusement, even when he comes down to the House, so that the memory of them keeps him smiling. I want to see the tax removed from all entertainments and sports, but this cannot be done this year.

Sir A. BUTT

I agree.

Mr. MACLEAN

The hon. Member should agree to this being done in part, if it cannot be done entirely.

Sir A. BUTT

No. Use the money for the whole community.

Mr. MACLEAN

I hope that the hon. Member will back us up when we propose schemes in which we intend money to be used for the whole community.

Sir A. BUTT

I have been waiting impatiently to hear them.

Mr. MACLEAN

It is the first time that I have known of any impatience on these benches. Usually hon. Members opposite have been too patient in bringing in legislation that is required. I support the proposal of the Chancellor on the understanding that next year, with a Labour Government still in power, we can carry out the total abolition of the Entertainments Duty.

Mr. HARMSWORTH

The hon. Member for Govan (Mr. Maclean) has attacked the Amendment to reduce this tax because he is satisfied with the reduction which the Government have already made.

Mr. MACLEAN

No.

Mr. HARMSWORTH

He is endeavouring to satisfy his conscience so as to allow himself to vote with his Government on this point. We on this side who have moved the total abolition of the duty have done so because we believe, and I think hon. Members on the Government Bench also believe, that this tax should be swept away and that the people should be allowed to have their amusement without any tax. We have heard a great deal to-night about theatres and cinemas, and they have been referred to as an industry. I have very little knowledge of that industry, and I have no connection with it I put down the Amendment for the total abolition of this tax because I think that we ought to act on behalf of the people who have got to go to those theatres and cinemas. They have been left out of the discussion. I welcome the reduction of this tax. It is because I think it should have gone further that I move that the tax should be abolished entirely. Last year I think it was the Financial Secretary to the Treasury who, in replying in Debate, led the House to believe that this year the tax would be entirely abolished. A great many of us were under the impression that that would be done this year and the party that are now in power—[HON. MEMBERS: "In office!"]—well, the party now in office were agreed last year that the tax should be entirely abolished.

What assurance have we that the reduction which is now being made will benefit the people who go to the cinemas? Of course, all who pay under 6d. will have the benefit, but in the case of those who pay between 6d. and 1s. 3d., if there is to be a scale up to the 1s. 3d. mark, it will be extremely difficult to pass the reduction on to those who go to the cinema or go to the galleries of provincial theatres. It would have been better if the Chancellor of the Exchequer had boldly done away with this tax altogether. I had hoped that he would have done so because in the speech last year he called the tax a mean tax and this view was shared by many other hon. Members on the Government benches. The hon. and learned Member for Crewe (Mr. Hemmerde) moved a reduction last year, in an excellent speech, and I hope that we shall have the privilege of hearing him again to-night. We also heard the hon. Member for South-East Leeds (Captain O'Grady), who has always been associated with the industry and taken a prominent part in asking that this tax should be abolished. I hope that he also will favour us with his views and that he will vote for the total abolition. I hope sincerely that those on the Government Benches will give some indication of their thoughts on this problem.

Reference has been made to the British Empire Exhibition. An amusement tax of 3d. is paid by everyone who goes there. That is a considerable tax on an entrance fee of 1s. 6d., and it would be beneficial if it were removed. I think that there is a great deal in what has been said by hon. Members on this side as to West End theatres. I have no interest in this matter, but I believe that there is no question of the industry making big profits, because it has not been doing so of late years. But some theatres in the West End do give straight drama, and, of course, opera, to which a large section of the population go, and I see no reason why they should have to pay this tax. I welcome the reduction in the case of the cinemas, but the way in which the Chancellor of the Exchequer has reduced the tax must re-act unfairly on theatres. Having put forward this proposal, he may not be inclined to go back on it and abolish the tax, but hon. Members have got to take these facts into consideration and will have to press this Amendment to a Division. It is a bad tax. It has been called the bad tax by the present Chancellor of the Exchequer and by other hon. Members. All this House need do is to read the reports of the Debate last year to learn what were the views then expressed by the party now in office, and if it is such a bad tax as the party now in office declared last year, then hon. Members should vote for its total abolition.

Mr. HEMMERDE

I do not intend to detain the House very long, but as on a former occasion when we had a Division I took part in the Debate, I should not like to give a silent vote on this occasion. My hon. Friend the Member for Govan (Mr. N. Maclean) does not seem to me to quite understand what it is that we complain of. When he says that this is merely a matter of the London theatres—40 London theatres is what he said—he is really quite unconsciously misrepresenting the facts of the case. As a matter of fact, this tax is not going to help the theatre industry in any part of the country. It is not going to help, at any rate, the leading theatres all through the provinces. It is not even going to help the second class theatres all through the provinces. After all, if you stand for a party that has as one of its ambitions municipal theatres, national theatres and national opera and municipal opera, are we really going to salve our consciences by saying we are going to do something to help the cinema and the small, cheap theatre and the shows, and leave those very things which supply high class drama and music all through the country to bear the whole burden of the tax.

I do not agree with my hon. Friend the Member for Balham (Sir A. Butt) when he said the Chancellor had done nothing. I think the Chancellor has given something to the industry, but he has given it in the wrong way. I understand what we have to consider on this Amendment is, shall we abolish it altogether six months hence, or shall we abolish half of it now. I think the right way was to abolish it altogether, starting on a later day. The Chancellor is limited with regard to money, and I should have been perfectly prepared to have supported a proposal to abolish the tax entirely later in the year. I cannot share the confidence of my friends around me that this tax is certain to be abolished next year. I am going to vote against this tax. I do not understand that I can get out of a pledge given after I have heard every man on the Front Bench here practically supporting it. I gave a pledge after consideration limited in this way, "I will vote for the abolition of the tax on indoor amusements." If the Chancellor tells us that he is sure that the public are going to have the benefit of the reduction of tax on outdoor amusements, I can only tell him that really I do not think his advisers have quite considered the position. I do not believe you are going to get any serious reduction throughout the country on entrance to cricket and football matches. The whole of that is going to be given to the clubs and not to the public at all. You are getting a certain amount on the cheap cinemas, and I am delighted you are going to get that.

I do not think the cinema industry is as important to the country as the theatre and music. But I think it is most unfair, after all that has been said upon this tax, that we should have now what appears to be almost a deliberate subsidising of what has practically no educational effect at the expense of music and the theatre. Some hon. Members may think the cinema is an educative force in the country. I do not. It is better than some plays, yes. I do not quite understand the position of people who will put a tax upon such plays as Bernard Shaw's play now running in London and will not take the tax off the cheap cinema undertaking in this country. I am not concerned entirely in taxation with the consumer. We have got to consider the industry. We had quotations just now from what Messrs. Chappell lost upon certain concerts last year. It is worth considering, especially on a Budget that is giving Messrs. Chappell considerable cause to think when you come to the McKenna Duties, with the abolition of which I am in entire sympathy. But you have got to consider in one way or another the theatrical industry at the present time—and I allude not only to the theatre but to music, because this tax hits everybody who gives a concert, struggling young beginners and people who are finding it difficult. You have got here during this season, which we hope will be good in London, three opera companies running. The whole world that understands music will, no doubt, understand opera. You will not; you will tax it. I cannot be a party, so long as I honestly believe in the nationalisation and municipalisation of music and the drama and making great educative forces out of these, to a tax that is not a tax upon the consumer but, in my opinion—and I know it is shared by everyone in the business—ultimately comes down on the industry itself. I started in 1915 and I condemned the tax when it was brought in on exactly the grounds on which I condemn it to-day. You have no right to tax an industry like that. It is an industry which, whenever it has the opportunity, always comes forward and lends its theatres, and the artists lend their services, for any good cause. I am not going to alter my views upon this question. I fought this question whenever it was raised in the House, I am bound to support any Amendment that will abolish this tax. I hope sincerely that this tax, next year, will be abolished, but if the House takes the matter into its own hands and abolishes it this year, I for one, should think the House right.

Mr. W. GRAHAM

Hon. Members in all parts of the House will agree that the Debate on the Entertainments Duty has followed the lines with which we are familiar from the Debates of recent years. I rise to explain the view which the Government take on this matter, and also to indicate one or two points, not merely in reply to criticism in this House, but also in response to the suggestions which have been made to us in recent times. What is the proposal the Chancellor of the Echequer makes, and what would be the effect of the Amendment now proposed by hon. Members opposite? It is quite clear, taking the Amendment, that it simply means that we are to do nothing at all by way of change until the early part of October next and then at that date to abolish the tax altogether. May I remind hon. Members at once that the cost within this year would be about £4,750,000, and £9,500,000 in a full year. Against that my right hon. Friend proposes to abolish, as from the early part of June, the whole of the tax up to 6d and, further than that, modification in tax up the scale to 1s. 3d.

When that is applied during the course of this year, from May, the cost will be approximately £3,400,000, and £4,000,000 in a full year, or, roundly speaking, not much short of one half of the total yield of this duty. So that, taking it as a plain and simple proposition, the choice would appear to lie to-night between covering a fair part of the scale in regard to the cheaper seats, and postponing any remission in order to get abolition in October next. There are hon. Members, and particularly the hon. Member for Balham (Sir A. Butt), who suggest that there is some breaking of a pledge on our part, because we have hitherto supported the abolition of this tax. Let me make it plain that our views on that matter are entirely unchanged. The House will recall that we came into office in January of this year, when estimates had to a great extent been fixed for a year ahead, and my right hon. Friend the Chancellor of the Exchequer had to consider a little later how far he could go towards realisation of the ideals which, in common with other Members of the House, we share in this matter. Let us notice the criticism of the hon. Member for Balham. He tells us that he has always been against the abolition of this duty on the ground that he wanted a preference for foodstuffs. We have given a large and drastic reduction of the taxation on food. We have gone beyond that, and have made this proposal, to the extent of giving up £3,400,000, or £4,000,000 in a full year, of this Entertainments Duty.

Sir H. CROFT

Is it not £2,500,000?

Mr. GRAHAM

No; for the remaining portion of this year it will be £3,400,000.

Sir H. CROFT

I thought you were referring to the McKenna Duties.

Mr. GRAHAM

They are like King Charles' head. The hon. and gallant Member will have an opportunity on that subject to-morrow. We have made a serious inroad upon the weight of this Entertainments Duty. The criticism advanced is that we have done nothing at all for the higher priced seats, and that we have left the problem of the West End London theatre untouched. I dare not detain the House by arguing the problem of the West End theatre, but anyone who has gone into that problem will admit that, after all, the Entertainments Duty is only one factor in the situation, and I am by no means satisfied that it is the biggest factor from the point of view of the difficulty that some of these West End theatres are encountering now. My right hon. Friend had to find out how, by such relief as he was able to give, he could confer a benefit upon the largest possible number of people. Hon. Members suggest that this is a vote-catching device, but surely that is not real criticism of a proposal of this kind. In all Budget taxation, when it comes to a question of remission, the inevitable desire is to find out where the weight of a tax lies, and, in the second place, so to adjust the remission that we confer the benefit on the largest number of people. When we applied that test to the Entertainments Duty, it was obvious that the great bulk of this tax came from the comparatively cheap and the very cheap seats in cinemas and other entertainments. In fact, if the tax were abolished up to the 2s. seats, which is a moderate price, the cost in round figures would be about £8,000,000. So that out of £9,500,000 we have £8,000,000 accounted for as pertaining to a very cheap class of accommodation.

If my right hon. Friend had been able to make as great a sacrifice as that, I have no doubt that that would have been one of the first of his desires, but it was found that to carry abolition up to 6d., and a modification of the duty up to 1s. 3d., would involve us in a full year in a loss of £4,000,000. There are many people who, while agreeing with us about the ultimate abolition of the Entertainments Duty, have criticised us strongly for giving a concession of this kind at all in the existing conditions of our national finance. They have said that this Entertainments Duty cannot rank with other claims, particularly food. On the other hand, probably the great majority of Members of this House will agree that if we take the cheaper seats of these cinemas, and if we look to the conditions under which classes of our people are, unfortunately, compelled to live, it is not true to say that entertainment is a luxury or an entertainment in the strict sense. I am prepared to call it, by my own definition, one of the conventional necessaries of life for these people. If that be true, undoubtedly the proposal of the Chancellor of the Exchequer confers immediate and substantial benefit upon that class.

Suggestions have been made that, within the limits of what we propose to concede, there might be some readjustment of the scale. The Chancellor of the Exchequer and I are very anxious that there should be no misunderstanding as to any further consideration or any further concession which he may be able to make. In the first place, we cannot agree to any modification of the complete exemption up to 6d. In the second place, it is quite impossible for my right hon. Friend, with his other commitments, to agree to anything which will cost him more than the £3,400,000, or the £4,000,000 in a full year. Those two points are for us beyond a shadow of doubt. My right hon. Friend is willing to consider whether in practice it would be possible so to delay the introduction of this change as to confer a benefit by way of reduction rather higher up the scale, but he has come to the conclusion that he must adhere to the date suggested, namely, 2nd June, with this proviso on his part—that subject to those considerations, he is willing to consider any modification of the scale which can be suggested, although I, personally, take the view that it will be hard to discover a method of spreading the remission more equitably and generously than that which we have devised.

A few words upon the general problem There is no modification at all on our part of our opposition to this tax. My right hon. Friend was one of its strongest opponents in other times, and the party which is represented in this quarter of the House is still against the Entertainments Duty. We think we have done a great deal in the short time we have been in office and with the resources at our disposal in giving away in a full year £4,000,000. I cannot anticipate what the Chancellor of the Exchequer may do in any future Budget which he may introduce, but my right hon. Friend and I are perfectly clear on this point, that if we are given another year of office it will be one of our strong desires and one of our keen desires—without making a pledge at this moment—to see this Duty abolished altogether.

Lieut.-Commander BURNEY

May I ask a question. The Chancellor of the Exchequer said he had received a pledge from the interests concerned that the remission would be passed on to the consumer. Can the hon. Gentleman give us some information as to how that result is to be achieved?

Mr. GRAHAM

It is true that authorised representatives of the industry have told us that they are very anxious indeed to see the remission passed on to the consumer, but clearly it is difficult for us on this side of the House to say to-night precisely how that can be worked out. I would only point out to the House that if they do not carry out that idea and, if the prices are not reduced, then, as I think they themselves would agree, a very large part of their campaign will be defeated in that they will not attract that extra patronage which they expect from tax remission.

Major COLFOX

This Debate has been a strange one, in that the supporters of the Amendment appear, in their own minds, to oppose it, while the opponents of the Amendment would seem, judging from their speeches, to be at heart supporters of the proposal. No hon. Member has yet expressed himself in favour of the retention of the Entertainments Duty. In my view it is the best and most just form of taxation, next after the Income Tax, which could possibly be imposed on the citizens of this country. The principle of taxation, in my view, should be to tax the luxuries of every one of us. Some hon. Members, including the hon. Member for Ashton-under-Lyne (Sir W. de Frece) suggests that entertainments are not luxuries, and when he says that to witness a performance of a Shakespearean play is not a luxury, I, to a certain extent, find myself in agreement with him. At the same time one cannot seriously combat the statement that all forms of entertainment, whether indulged in by rich and prosperous people or by their less fortunate fellow-citizens, are entertainments. It is true to say, as has been said, that medical practitioners recommend their patients to take part in entertainments. Entertainments and recreation are to some extent for the good of one's health and make one better able to carry out one's duties, but, in fact, when we analyse the question there are very few luxuries which, if indulged in moderately, are not to the benefit of those who indulge in them. They are none the less luxuries, and I therefore cannot imagine any form of taxation which in principle is fairer than the Entertainments Duty. The hon. Member for Ashton-under-Lyne said we do not tax all luxuries, and he asked, "Why not tax jewellery?" Why not, indeed? The ideal of perfection would be to tax all forms of luxury spending, if it were possible and practicable, but clearly it is not feasible or practicable to tax all forms of luxury spending. One only wishes it were. Here, however, is a form of luxury spending which it is practicable to tax, which has been taxed with considerable success for several years, and which should continue to be taxed.

It will be interesting to read the Division List of the Division which will be taken presently and to compare it with the Division taken a week or two ago on the Summer Time Bill. Here to-night we have the advocates of the entertainment industry supporting a proposal for the total abolition of the Entertainments Duty because, they tell us, it presses with undue severity upon that industry. I wonder if we shall find that those same advocates were among those who supported the Second Reading of the Summer Time Bill, which representatives of the theatrical profession say will have a more disastrous effect upon the theatrical industry than the Entertainments Duty. We have it from the hon. Member for Balham and Tooting (Sir A. Butt), with his great knowledge, that the abolition and reduction, as proposed by the Chancellor of the Exchequer, will do considerable harm to indoor entertainments and confer no benefit on the consumer. Therefore, there can be no excuse for offering to sacrifice on behalf of the nation this source of revenue unless it be that the right hon. Gentleman hopes thereby to secure for himself and his party a substantial number of votes at the next election. He tells us that it is a mean tax. I agree with him to this extent, that the incidence of the duty has until now been unfair. If the Chancellor's proposal were to equalise the incidence of this duty and bring it as nearly as possible into proportion with the prices charged for admission, I feel he would have the support of all hon. Members. It is just and equitable that everyone should pay a portion of this duty, but it is also just and equitable that each one should pay in proportion to the amount which he is prepared to spend upon himself. No one likes to pay taxation. Taxation is an unpleasant necessity, but, surely, it must be recognised to be the duty and the privilege of every citizen, rich and poor, to take his share in paying his portion of that taxation.

Mr. CLIMIE

The speech to which we have just listened by the hon. and galant Member for West Dorset (Major Colfox) reminds me, though I was not a Member of the House last year, more of what I heard were the views, of hon. Members opposite, than does the Amendment that has been moved by the hon. Member for Ashton-under-Lyne (Sir W. de Frece). The Labour party have always declared themselves in favour of the abolition of the Entertainments Duty, and I am glad indeed that the Chancellor of the Exchequer has been able at this time to do what he has done towards the abolition of the tax. Personally, I should have been glad if he had seen his way to abolish this tax altogether. From the statement that we have just heard from the Financial Secretary to the Treasury, what I have long had in my own mind has been borne out, namely, that it was the comparatively poor people of the community who paid the major portion of this Entertainments Duty. We now know that quite £8,000,000, out of a total of £9,500,000 collected from this tax, is paid by people who can only afford, when they go to entertainments, to pay up to a price of 2s., proving quite definitely, I think, that the major portion of this tax is a very heavy burden indeed upon the comparatively poor section of the population.

10.0 P.M.

I make no great complaint at all about the Chancellor of the Exchequer being able to relieve those taxpayers only to the extent of £4,000,000. The Amendment, I believe, would mean that the right hon. Gentleman would require to find another £5,500,000, but no estimate has been brought forward as to where he should find that money. [An HON. MEMBER: "The McKenna Duties!"] We will hear to-morrow arguments as to whether or not the McKenna Duties should come off, but I should not be in order in discussing that question now. The hon. Member who moved the Amendment did not hint where the Chancellor of the Exchequer should find this money. Does he mean that the Corporation Profits Tax should not be taken off, or that the Sugar Duty or the Tea Duty should not have been reduced? He has not said. The only thing he does is to complain because the Chancellor of the Exchequer cannot take rabbits out of a hat. I am glad the right hon. Gentleman, when he is limited with his money, has the courage to do what he has done. After all, when it is remembered that he is relieving taxation by £4,000,000 in a full year on the small amounts that those people pay to go into the small cinema shows and into the cheap seats in theatres, it must mean that hundreds of thousands—nay, millions—of people will be benefited by this remission of tax in connection with entertainments. I understand that the Mover of the Amendment takes a very keen interest in entertainments, and I do hope that he will realise that at last we have a Chancellor of the Exchequer who is willing to go along the road that he wants him to travel. He is not able to go all the way this time, but the hon. Member can depend upon it that next year, when the Labour party comes into power, there is every possibility of this tax being entirely wiped out.

Mr. SNOWDEN

May I appeal to the House to come to a decision on this Amendment? It will be remembered that last week the Government agreed, suiting the convenience of the House, and in order to avoid a late Sitting, to give part of another day to the remainder of the Report stage of these Resolutions. I think this Amendment has been quite adequately discussed. I do not wish to move the Closure, but with general agreement I hope we may go to a division now.

Lieut.-Commander BURNEY

I am afraid I shall have to oppose this Amendment, because I am one of the few in this House who are in favour of the retention of the Entertainments Duty. As, however, the majority are evidently in favour either of its reduction or total abolition, it seems that the only point of substance to which one can address oneself is to endeavour to see that the remission of taxation is passed on to the public and is not put into the pockets of the cinema trust. I was somewhat disappointed at the reply of the Financial Secretary to the Treasury in regard to the value and the extent of the pledge which the Chancellor of the Exchequer has been able to extract from the theatrical profession. It seemed to me to be a pledge of no substance whatever, but merely a pious hope that they might be able to pass a certain proportion of the rebate on to the public. If one looks at the actual scale of the reduction, that is to say, on the cheap seats, in which the lowest price is 2½d., with the tax at ½d., one will see the great difficulty of passing on a remission of that kind to the public.

The cinema interests have attacked upon two lines. Looking at the scale, it seems to me there will be great difficulty in passing on a remission of that kind to the public. The cinema industry have attacked on two lines. First of all, they have said they are so hard up that they are losing money. That is not borne out by the actual statistics of the case. During the last year no fewer than 54 new cinemas have been put up with a total seating capacity of something like 66,000. That does not imply extraordinarily bad trade. As hon. Members know quite well, after the War ended there was a boom of cinemas in exactly the same way as there was a boom in everything else. A very large number of cinemas was erected in places where there was not sufficient public for the seating

capacity provided. Those cinemas have failed as all badly-devised industries should fail. They have not failed because the cinemas were bad, but because the situations selected for the picture houses were not good. Therefore, I would ask the House to look at it in this way. In some cases there is bad business in cinemas because the halls are in bad situations. In others, the cinema trade is booming. In the places where the trade is bad, why should the cinema man pass on any of this remission to the public? There is no reason at all why he should. In those places where the trade is good, he has merely to increase the price of his seats. He is supplying a public demand, and therefore he is independent. I am informed by my hon. Friend the Member for Balham and Tooting (Sir A. Butt), who knows a great deal of the technicalities of this trade, that there is nothing whatever to prevent the cinema interests increasing the price of their seats if they have the public there who will pay the price, thereby eliminating altogether the cheaper seats. For that reason, I ask the Chancellor of the Exchequer to consider a suggestion in regard to this taxation. It is that he should have an evaluation made of the seating capacity of the theatre or cinema hall, and on that work out what the actual tax would be where this rebate has been given, and then assess that theatre or cinema as to the percentage which it should pay, leaving it to evaluate the seats as it likes. That would do two things: it would remove the tax from the ticket, which annoys the public very much, and it would enable the managers of the halls or theatres to price their seats as they like. I ask the Chancellor of the Exchequer, therefore, to consider that suggestion.

Mr. SNOWDEN rose in his place, and claimed to move, "That the Question be now put."

Question put, "That the Question be now put."

The House divided: Ayes, 253; Noes, 157.

Division No. 69.]	AYES.	[10.10 p.m.
Ackroyd, T. R.	Alexander, A. V. (Sheffield, Hillsbro')	Ayles, W. H.
Acland, Rt. Hon. Francis Dyke	Allen, R. Wilberforce (Leicester, S.)	Baker, Walter
Adamson, Rt. Hon. William	Alstead, R.	Banton, G.
Adamson, W. M. (Staff., Cannock)	Aske, Sir Robert William	Barnes, A.
Alden, Percy	Attlee, Major Clement R.	Batey, Joseph
Benn, Captain Wedgwood (Leith)	Hobhouse, A. L.	Raffan, P. W.
Birkett, W. N.	Hodge, Lieut.-Col. J. P. (Preston)	Raffety, F. W.
Black, J. W.	Hoffman, P. C.	Ramage, Captain Cecil Beresford
Bondfield, Margaret	Howard, Hon. G. (Bedford, Luton)	Rathbone, Hugh R.
Bonwick, A.	Hughes, Collingwood	Raynes, W. R.
Bowerman, Rt. Hon. Charles W.	Jackson, R. F. (Ipswich)	Rea, W. Russell
Broad, F. A.	Jenkins, W. (Glamorgan, Neath)	Rees, Sir Beddoe
Bromfield, William	Jenkins, W. A. (Brecon and Radnor)	Rendall, A.
Brown, A. E. (Warwick, Rugby)	Jewson, Dorothea	Richards, R.
Brown, James (Ayr and Bute)	John, William (Rhondda, West)	Richardson, R. (Houghton-le-Spring)
Brunner, Sir J.	Johnstone, Harcourt (Willesden, East)	Roberts, Rt. Hon. F. O. (W. Bromwich)
Buchanan, G.	Jones, Henry Haydn (Merioneth)	Robertson, J. (Lanark, Bothwell)
Buckingham, Sir H.	Jones, Rt. Hon. Leif (Camborne)	Robinson, Sir T. (Lancs, Stretford)
Buckie, J.	Jones, Morgan (Caerphilly)	Royce, William Stapleton
Burnie, Major J. (Bootle)	Jones, T. I. Mardy (Pontypridd)	Royle, C.
Buxton, Rt. Hon. Noel	Jowett, Rt. Hon. F. W. (Bradford, E.)	Rudkin, Lieut.-Colonel C. M. C.
Chapple, Dr. William A.	Jowitt, W. A. (The Hartlepools)	Samuel, H. Walter (Swansea, West)
Climie, R.	Kay, Sir R. Newbald	Scrymgeour, E.
Cluse, W. S.	Kedward, R. M.	Scurr, John
Collins, Sir Godfrey (Greenock)	Keens, T.	Sexton, James
Collins, Patrick (Walsall)	Kennedy, T.	Shaw, Rt. Hon. Thomas (Preston)
Compton, Joseph	Kenyon, Barnet	Shinwell, Emanuel
Comyns-Carr, A. S.	Kirkwood, D.	Simon, Rt. Hon. Sir John
Cory, Sir Clifford	Laverack, F. J.	Simpson, J. Hope
Costello, L. W. J.	Law, A.	Sitch, Charles H.
Cove, W. G.	Lawrence, Susan (East Ham, North)	Smith, T. (Pontefract)
Crittall, V. G.	Lawson, John James	Smith, W. R. (Norwich)
Darbishire, C. W.	Leach, W.	Snell, Harry
Davies, Ellis (Denbigh, Denbigh)	Lee, F.	Snowden, Rt. Hon. Philip
Davies, Evan (Ebbw Vale)	Lindley, F. W.	Spence, R.
Davies, Rhys John (Westhoughton)	Linfield, F. C.	Spencer, George A. (Broxtowe)
Davison, J. E. (Smethwick)	Livingstone, A. M.	Spencer, H. H. (Bradford, S.)
Dickie, Captain J. P.	Loverseed, J. F.	Spero, Dr. G. E.
Dickson, T.	Lowth, T.	Stamford, T. W.
Dodds, S. R.	Lunn, William	Starmer, Sir Charles
Duckworth, John	McCrae, Sir George	Stephen, Campbell
Dukes, C.	McEntee, V. L.	Stewart, J. (St. Rollox)
Edwards, C. (Monmouth, Bedwellty)	Mackinder, W.	Stranger, Innes Harold
Edwards, G. (Norfolk, Southern)	Maclean, Neil (Glasgow, Govan)	Sturrock, J. Leng
Edwards, John H. (Accrington)	Macnamara, Rt. Hon. Dr. T. J.	Sullivan, J.
Egan, W. H.	Maden, H.	Sunlight, J.
England, Colonel A.	Mansel, Sir Courtenay	Sutherland, Rt. Hon. Sir William
Falconer, J.	March, S.	Sutton, J. E.
Finney, V. H.	Marks, Sir George Croydon	Tattersall, J. L.
Foot, Isaac	Marley, James	Thompson, Piers G. (Torquay)
Franklin, L. B.	Martin, F. (Aberdeen & Kinc'dine, E.)	Thorne, G. R. (Wolverhampton, E.)
Gardner, B. W. (West Ham, Upton)	Martin, W. H. (Dumbarton)	Thornton, Maxwell R.
Gardner, J. P. (Hammersmith, North)	Masterman, Rt. Hon. C. F. G.	Thurtle, E.
Gavan-Duffy, Thomas	Meyler, Lieut.-Colonel H. M.	Tinker, John Joseph
George, Major G. L. (Pembroke)	Middleton, G.	Tout, W. J.
Gillett, George M.	Millar, J. D.	Trevelyan, Rt. Hon. C. P.
Gorman, William	Mills, J. E.	Turner-Samuels, M.
Gosling, Harry	Mitchell, R. M. (Perth & Kinross, Perth)	Varley, Frank B.
Gould, Frederick (Somerset, Frome)	Mond, H.	Viant, S. P.
Graham, D. M. (Lanark, Hamilton)	Montague, Frederick	Vivian, H.
Graham, W. (Edinburgh, Central)	Morris, R. H.	Wallhead, Richard C.
Greenall, T.	Morrison, Herbert (Hackney, South)	Ward, G. (Leicester, Bosworth)
Grenfell, D. R. (Glamorgan)	Morrison, R. C. (Tottenham, N.)	Watson, W. M. (Dunfermline)
Groves, T.	Morse, W. E.	Watts-Morgan, Lt.-Col. D. (Rhondda)
Grundy, T. W.	Moulton, Major Fletcher	Webb, Rt. Hon. Sidney
Guest, Dr L. Haden (Southwark, N.)	Muir, John W.	Welsh, J. C.
Hall, F. (York, W. R., Normanton)	Muir, Ramsay (Rochdale)	Westwood, J.
Hall, G. H. (Merthyr Tydvil)	Murray, Robert	Wheatley, Rt. Hon. J.
Hamilton, Sir R. (Orkney & Shetland)	Naylor, T. E.	White, H. G. (Birkenhead, E.)
Harbord, Arthur	Nichol, Robert	Whiteley, W.
Hardie, George D.	Nixon, H.	Wignall, James
Harris, John (Hackney, North)	O'Grady, Captain James	Williams, Dr. J. H. (Llanelly)
Harris, Percy A.	Oliver, George Harold	Williams, Lt.-Col. T. S. B. (Kennington)
Hartshorn, Rt. Hon. Vernon	Oliver, P. M. (Manchester, Blackley)	Williams, Maj. A. S. (Kent, Sevenoaks)
Harvey, T. E. (Dewsbury)	Owen, Major G.	Willison, H.
Hastings, Somerville (Reading)	Paling, W.	Wilson, R. J. (Jarrow)
Haycock, A. W.	Parkinson, John Allen (Wigan)	Windsor, Walter
Hayday, Arthur	Parry, Thomas Henry	Wintringham, Margaret
Hayes, John Henry	Perry, S. F.	Wood, Major M. M. (Aberdeen, C.)
Hemmerde, E. G.	Pethick-Lawrence, F. W.	Woodwark, Lieut.-Colonel G. G.
Henderson, A. (Cardiff, South)	Phillipps, Vivian	Wright, W.
Henderson, T. (Glasgow)	Ponsonby, Arthur	Young, Andrew (Glasgow, Partick)
Henderson, W. W. (Middlesex, Enfield)	Potts, John S.
Hillary, A. E.	Pringle, W. M. R.	TELLERS FOR THE AYES.—
Hirst, G. H.	Purcell, A. A.	Mr. Spoor and Mr. Warne.
NOES.
Agg-Gardner, Rt. Hon. Sir James T.	Ashley, Lt.-Col. Rt. Hon. Wilfrid W.	Balfour, George (Hampstead)
Apsley, Lord	Austin, Sir Herbert	Banks, Reginald Mitchell
Barnett, Major Richard W.	Galbraith, J. F. W.	Percy, Lord Eustace (Hastings)
Barnston, Major Sir Harry	Gates, Percy	Perkins, Colonel E. K.
Becker, Harry	Gaunt, Rear-Admiral Sir Guy R.	Perring, William George
Beckett, Sir Gervase	Gilmour, Colonel Rt. Hon. Sir John	Philipson, Mabel
Bellairs, Commander Carlyon W.	Greene, W. P. Crawford	Raine, W.
Benn, Sir A. S. (Plymouth, Drake)	Grenfell, Edward C. (City of London)	Rawlinson, Rt. Hon. John Fredk. Peel
Berry, Sir George	Gretton, Colonel John	Rawson, Alfred Cooper
Betterton, Henry B.	Gwynne, Rupert S.	Remer, J. R.
Birchall, Major J. Dearman	Hacking, Captain Douglas H.	Remnant, Sir James
Bird, Sir R. B. (Wolverhampton, W.)	Hannon, Patrick Joseph Henry	Rentoul, G. S.
Blades, Sir George Rowland	Harland, A.	Rhys, Hon. C. A. U.
Blundell, F. N.	Harmsworth, Hon. E. C. (Kent)	Richardson, Lt.-Col. Sir P. (Chertsey)
Bowyer, Capt. G. E. W.	Harvey, C. M. B. (Aberd'n & Kincardne)	Ropner, Major L.
Brass, Captain W.	Henn, Sir Sydney H.	Roundell, Colonel R. F.
Bridgeman, Rt. Hon. William Clive	Hennessy, Major J. R. G.	Russell, Alexander West (Tynemouth)
Bull, Rt. Hon. Sir William James	Herbert, Capt. Sidney (Scarborough)	Samuel, A. M. (Surrey, Farnham)
Burman, J. B.	Hogg, Rt. Hon. Sir D. (St. Marylebone)	Samuel, Samuel (W'dsworth, Putney)
Burney, Lieut.-Com. Charles D.	Hogge, James Myles	Sandeman, A. Stewart
Buller, Sir Geoffrey	Hohler, Sir Gerald Fitzroy	Savery, S. S.
Butt, Sir Alfred	Hood, Sir Joseph	Shepperson, E. W.
Calne, Gordon Hall	Hope, Rt. Hon. J. F. (Sheffield, C.)	Sinclair, Col. T. (Queen's Univ., Belfst)
Cassels, J. D.	Horlick, Lieut.-Colonel J. N.	Smith-Carington, Neville W.
Chadwick, Sir Robert Burton	Howard, Hon. D. (Cumberland, North)	Somerville, Daniel (Barrow-in-Furness)
Chamberlain, Rt. Hon. N. (Ladywood)	Howard-Bury, Lieut.-Col. C. K.	Stanley, Lord
Chilcott, Sir Warden	Hume-Williams, Sir W. Ellis	Steel, Samuel Strang
Clarry, Reginald George	Huntingfield, Lord	Stuart, Hon. J. (Moray and Nairn)
Clayton, G. C.	Iliffe, Sir Edward M.	Stuart, Lord C. Crichton-
Cobb, Sir Cyril	Inskip, Sir Thomas Walker H.	Sueter, Rear-Admiral Murray Fraser
Cockerill, Brigadier-General G. K.	Jackson, Lieut.-Colonel Hon. F. S.	Sutcliffe, T.
Colfox, Major Wm. Phillips	James, Lieut.-Colonel Hon. Cuthbert	Sykes, Major-Gen. Sir Frederick H.
Cope, Major William	Joynson-Hicks, Rt. Hon. Sir William	Thompson, Luke (Sunderland)
Cowan, Sir Wm. Henry (Islington, N.)	Kindersley, Major G. M.	Thomson, Sir W. Mitchell-(Croydon, S.)
Croft, Brigadier-General Sir H.	King, Captain Henry Douglas	Titchfield, Major the Marquess of
Cunliffe, Joseph Herbert	Lamb, J. Q.	Tryon, Rt. Hon. George Clement
Curzon, Captain Viscount	Lloyd-Greame, Rt. Hon. Sir Philip	Vaughan-Morgan, Col. K. P.
Davidson, Major-General Sir J. H.	Locker-Lampson, G. (Wood Green)	Waddington, R.
Davies, Alfred Thomas (Lincoln)	Locker-Lampson, Com. O. (Handsw'th)	Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Davies, Maj. Geo. F. (Somerset, Yeovil)	Lyle, Sir Leonard	Warrender, Sir Victor
Davies, Sir Thomas (Cirencester)	McLean, Major A.	Watson, Sir F. (Pudsey and Otley)
Dawson, Sir Philip	Macnaghten, Hon. Sir Malcolm	Wells, S. R.
Doyle, Sir N. Grattan	McNeill, Rt. Hon. Ronald John	Weston, John Wakefield
Eden, Captain Anthony	Makins, Brigadier-General E.	Wheler, Lieut.-Col. Granville C. H.
Edmondson, Major A. J.	Mason, Lieut.-Colonel Glyn K.	Wilson, Sir Charles H. (Leeds, Central)
Elveden, Viscount	Meller, R. J.	Wise, Sir Fredric
Erskine, James Malcolm Monteith	Mitchell, W. F. (Saffron Walden)	Wood, Major Rt. Hon. Edward F. L.
Falle, Major Sir Bertram Godfray	Moore-Brabazon, Lieut.-Col. J. T. C.	Worthington-Evans, Rt. Hon. Sir L.
Ferguson, H.	Nesbitt, Robert C.	Wragg, Herbert
FitzRoy, Captain Rt. Hon. Edward A.	Ormsby-Gore, Hon. William	Yerburgh, Major Robert D. T.
Forestier-Walker, L.	Pease, William Edwin
Frece, Sir Walter de	Pennefather, Sir John	TELLERS FOR THE NOES.—
Fremantle, Lieut.-Colonel Francis E.	Penny, Frederick George	Colonel G. A. Gibbs and Commander B. Eyres-Monsell.

Question put accordingly, "That the words 'Second day of June' stand part of the said Resolution."

The House proceeded to a Division—

Mr. HARMSWORTH

(seated and covered): In voting for this Amendment, are we also voting for the consequential Amendment standing on the Paper in the name of the same hon. Member?

Mr. SPEAKER

They are practically the same.

Mr. HARMSWORTH

Are we voting for the total abolition of the Entertainments Duty, if we vote for this Amendment?

Mr. SPEAKER

I must leave hon. Members to interpret their own Amendment.

The House divided: Ayes, 282; Noes, 69.

Division No. 70.]	AYES.	[10.20 p.m.
Ackroyd, T. R.	Ayles, W. H.	Blades, Sir George Rowland
Acland, Rt. Hon. Francis Dyke	Baker, Walter	Bondfield, Margaret
Adamson, Rt. Hon. William	Balfour, George (Hampstead)	Bowerman, Rt. Hon. Charles W.
Adamson, W. M. (Staff., Cannock)	Banton, G.	Bowyer, Capt. G. E. W.
Alden, Percy	Barnes, A.	Brass, Captain W.
Alexander, A. V. (Sheffield, Hillsbro')	Batey, Joseph	Broad, F. A.
Allen, R. Wilberforce (Leicester, S.)	Beckett, Sir Gervase	Bromfield, William
Alstead, R.	Benn, Captain Wedgwood (Leith)	Brown, A. E. (Warwick, Rugby)
Ashley, Lt.-Col. Rt. Hon. Wilfrid W.	Birchall, Major J. Dearman	Brown, James (Ayr and Bute)
Aske, Sir Robert William	Bird, Sir R. B. (Wolverhampton, W.)	Brunner, Sir J.
Attlee, Major Clement R.	Birkett, W. N.	Buchanan, G.
Austin, Sir Herbert	Black, J. W.	Buckie, J.
Bull, Rt. Hon. Sir William James	Jewson, Dorothea	Richards, R.
Burman, J. B.	John, William (Rhondda, West)	Richardson, R. (Houghton-le-Spring)
Burnie, Major J. (Bootle)	Johnstone, Harcourt (Willesden, East)	Roberts, Rt. Hon. F. O. (W. Bromwich)
Buxton, Rt. Hon. Noel	Jones, Henry Haydn (Merioneth)	Robertson, J. (Lanark, Bothwell)
Chapple, Dr. William A.	Jones, Rt. Hon. Leif (Camborne)	Ropner, Major L.
Climie, R.	Jones, Morgan (Caerphilly)	Roundell, Colonel R. F.
Cluse, W. S.	Jones, T. I. Mardy (Pontypridd)	Royce, William Stapleton
Cockerill, Brigadier-General G. K.	Jowett, Rt. Hon. F. W. (Bradford, E.)	Royle, C.
Colfox, Major Wm. Phillips	Jowitt, W. A. (The Hartlepools)	Rudkin, Lieut.-Colonel C. M. C.
Collins, Sir Godfrey (Greenock)	Kay, Sir R. Newbald	Samuel, H. Walter (Swansea, West)
Collins, Patrick (Walsall)	Keens, T.	Savery, S. S.
Compton, Joseph	Kennedy, T.	Scurr, John
Comyns-Carr, A. S.	Kenyon, Barnet	Seely, H. M. (Norfolk, Eastern)
Cope, Major William	Kindersley, Major G. M.	Seely, Rt. Hn. Maj.-Gen. J. E. B. (I. of W.)
Cory, Sir Clifford	King, Captain Henry Douglas	Sexton, James
Costello, L. W. J.	Kirkwood, D.	Shaw, Rt. Hon. Thomas (Preston)
Cove, W. G.	Lansbury, George	Shepperson, E. W.
Crittall, V. G.	Laverack, F. J.	Shinwell, Emanuel
Darbishire, C. W.	Law, A.	Short, Alfred (Wednesday)
Davies, Alfred Thomas (Lincoln)	Lawrence, Susan (East Ham, North)	Simon, Rt. Hon. Sir John
Davies, Ellis (Denbigh, Denbigh)	Lawson, John James	Simpson, J. Hope
Davies, Evan (Ebbw Vale)	Leach, W.	Sitch, Charles H.
Davies, Rhys John (Westhoughton)	Lee, F.	Smith, Ben (Bermondsey, Rotherhithe)
Dickie, Captain J. P.	Lindley, F. W.	Smith, T. (Pontefract)
Dickson, T.	Linfield, F. C.	Smith, W. R. (Norwich)
Dodds, S. R.	Livingstone, A. M.	Smith-Carington, Neville W.
Duckworth, John	Loverseed, J. F.	Snell, Harry
Dudgeon, Major C. R.	Lowth, T.	Snowden, Rt. Hon. Philip
Dukes, C.	Lunn, William	Spence, R.
Edwards, C. (Monmouth, Bedwellty)	McCrae, Sir George	Spencer, George A. (Broxtowe)
Edwards, G. (Norfolk, Southern)	McEntee, V. L.	Spencer, H. H. (Bradford, S.)
Egan, W. H.	Mackinder, W.	Spero, Dr. G. E.
Elveden, Viscount	Maclean, Neil (Glasgow, Govan)	Stamford, T. W.
Falconer, J.	Macnaghten, Hon. Sir Malcolm	Starmer, Sir Charles
Falle, Major Sir Bertram Godfray	Macnamara, Rt. Hon. Dr. T. J.	Steel, Samuel Strang
Foot, Isaac	Mansel, Sir Courtenay	Stephen, Campbell
Franklin, L. B.	March, S.	Stewart, J. (St. Rollox)
Gardner, B. W. (West Ham, Upton)	Marks, Sir George Croydon	Stranger, Innes Harold
Gardner, J. P. (Hammersmith, North)	Marriott, Sir J. A. R.	Stuart, Hon. J. (Moray and Nairn)
Gavan-Duffy, Thomas	Martin, F. (Aberdeen & Kinc'dine, E.)	Sturrock, J. Leng
George, Major G. L. (Pembroke)	Martin, W. H. (Dumbarton)	Sullivan, J.
Gillett, George M.	Masterman, Rt. Hon. C. F. G.	Sunlight, J.
Gorman, William	Meyler, Lieut.-Colonel H. M.	Sutherland, Rt. Hon. Sir William
Gosling, Harry	Middleton, G.	Sutton, J. E.
Gould, Frederick (Somerset, Frome)	Millar, J. D.	Tattersall, J. L.
Graham, D. M. (Lanark, Hamilton)	Mills, J. E.	Thorne, G. R. (Wolverhampton, E.)
Graham, W. (Edinburgh, Central)	Mitchell, R. M. (Perth & Kinross, Perth)	Thornton, Maxwell R.
Greenall, T.	Mond, H.	Thurtle, E.
Greenwood, A. (Nelson and Colne)	Morris, R. H.	Tinker, John Joseph
Grenfell, D. R. (Glamorgan)	Morrison, Herbert (Hackney, South)	Tout, W. J.
Gretton, Colonel John	Morrison, R. C. (Tottenham, N.)	Trevelyan, Rt. Hon. C. P.
Groves, T.	Morse, W. E.	Turner-Samuels, M.
Grundy, T. W.	Moulton, Major Fletcher	Varley, Frank B.
Guest, Dr. L. Haden (Southwark, N.)	Muir, John W.	Viant, S. P.
Hall, F. (York, W. R., Normanton)	Muir, Ramsay (Rochdale)	Vivian, H.
Hall, G. H. (Merthyr Tydvil)	Murray, Robert	Wallhead, Richard C.
Hamilton, Sir R. (Orkney & Shetland)	Naylor, T. E.	Ward, G. (Leicester, Bosworth)
Harbord, Arthur	Newman, Sir R. H. S. D. L. (Exeter)	Warrender, Sir Victor
Hardie, George D.	Nichol, Robert	Watson, W. M. (Dunfermline)
Harland, A.	Nicholson, William G. (Petersfield)	Watts-Morgan, Lt.-Col. D. (Rhondda)
Harris, John (Hackney, North)	Nixon, H.	Webb, Rt. Hon. Sidney
Harris, Percy A.	O'Grady, Captain James	Wedgwood, Col. Rt. Hon. Josiah C.
Hartshorn, Rt. Hon. Vernon	Oliver, George Harold	Welsh, J. C.
Harvey, T. E. (Dewsbury)	Oliver, P. M. (Manchester, Blackley)	Westwood, J.
Hastings, Somerville (Reading)	Ormsby-Gore, Hon. William	Wheatley, Rt. Hon. J.
Hayday, Arthur	Owen, Major G.	White, H. G. (Birkenhead, E.)
Hayes, John Henry	Paling, W.	Whiteley, W.
Henderson, A. (Cardiff, South)	Parkinson, John Allen (Wigan)	Wignall, James
Henderson, T. (Glasgow)	Parry, Thomas Henry	Williams, David (Swansea, E.)
Henderson, W. W. (Middlesex, Enfield)	Perry, S. P.	Williams, Dr. J. H. (Llanelly)
Hennessy, Major J. R. G.	Pethick-Lawrence, F. W.	Williams, Lt.-Col. T. S. B. (Kennington)
Herbert, Capt. Sidney (Scarborough)	Phillipps, Vivian	Williams, Maj. A. S. (Kent, Sevenoaks)
Hirst, G. H.	Ponsonby, Arthur	Willison, H.
Hobhouse, A. L.	Potts, John S.	Wilson, R. J. (Jarrow)
Hodge, Lieut.-Col. J. P. (Preston)	Pringle, W. M. R.	Windsor, Walter
Hoffman, P. C.	Purcell, A. A.	Wise, Sir Fredric
Hogge, James Myles	Raffan, P. W.	Wood, Major M. M. (Aberdeen, C.)
Howard, Hon. D. (Cumberland, North)	Raffety, F. W.	Woodwark, Lieut.-Colonel G. G.
Howard, Hon. G. (Bedford, Luton)	Rathbone, Hugh R.	Wright, W.
Hume-Williams, Sir W. Ellis	Raynes, W. R.	Young, Andrew (Glasgow, Partick)
Jackson, R. F. (Ipswich)	Rea, W. Russell
Jenkins, W. (Glamorgan, Neath)	Rendall, A.	TELLERS FOR THE AYES.—
Jenkins, W. A. (Brecon and Radnor)	Rhys, Hon. C. A. U.	Mr. Spoor and Mr. Warne.

NOES.
Agg-Gardner, Rt. Hon. Sir James T.	Ferguson, H.	Rees, Sir Beddoe
Apsley, Lord	Forestier-Walker, L.	Remer, J. R.
Barnett, Major Richard W.	Fremantle, Lieut.-Colonel Francis F.	Remnant, Sir James
Becker, Harry	Galbraith, J. F. W.	Richardson, Lt.-Col. Sir P. (Chertsey)
Bellairs, Commander Carlyon W.	Gates, Percy	Robinson, Sir T. (Lancs., Stretford)
Benn, Sir A. S. (Plymouth, Drake)	Gaunt, Rear-Admiral Sir Guy R.	Russell, Alexander West (Tynemouth)
Berry, Sir George	Greene, W. P. Crawford	Samuel, A. M. (Surrey, Farnham)
Bonwick, A.	Hacking, Captain Douglas H.	Samuel, Samuel (W'dsworth, Putney)
Buckingham, Sir H.	Hannon, Patrick Joseph Henry	Sandeman, A. Stewart
Butler, Sir Geoffrey	Harmsworth, Hon. E. C. (Kent)	Sinclair, Col. T. (Queen's Univ., Belfst)
Caine, Gordon Hall	Hemmerde, E. G.	Somerville, Daniel (Barrow-in-Furness)
Cassels, J. D.	Hogbin, Henry Cairns	Stuart, Lord C. Crichton-
Chadwick, Sir Robert Burton	Hood, Sir Joseph	Sutcliffe, T.
Chilcott, Sir Warden	Iliffe, Sir Edward M.	Titchfield, Major the Marquess of
Clarry, Reginald George	Inskip, Sir Thomas Walker H.	Waddington, R.
Clayton, G. C.	Locker-Lampson, Com. O. (Handsw'th)	Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Cobb, Sir Cyril	Lyle, Sir Leonard	Watson, Sir F. (Pudsey and Otley)
Croft, Brigadier-General Sir H.	Maden, H.	Weston, John Wakefield
Davies, Maj. Geo. F. (Somerset, Yeovil)	Maitland, Sir Arthur D. Steel-	Wilson, Sir Charles H. (Leeds, Central)
Dawson, Sir Philip	Meller, R. J.	Wragg, Herbert
Doyle, Sir N. Grattan	Nicholson, O. (Westminster)	Yerburgh, Major Robert D. T.
Edwards, John H. (Accrington)	Percy, Lord Eustace (Hastings)
England, Colonel A.	Perkins, Colonel E. K.	TELLERS FOR THE NOES.—
Erskine, James Malcolm Monteith	Raine, W.	Sir Walter de Frece and Sir Alfred Butt.

Mr. SNOWDEN

claimed, "That the Main Question be now put."

Question put accordingly, "That this

House doth agree with the Committee in the said Resolution."

The House divided: Ayes, 306; Noes, 42.

Division No. 71.]	AYES.	[10.35 p.m.
Ackroyd, T. R.	Cove, W. G.	Harbord, Arthur
Adamson, Rt. Hon. William	Cowan, D. M. (Scottish Universities)	Hardie, George D.
Adamson, W. M. (Staff., Cannock)	Crittall, V. G.	Harland, A.
Alden, Percy	Crooke, J. Smedley (Deritend)	Harmsworth, Hon. E. C. (Kent)
Alexander, A. V. (Sheffield, Hillsbro)	Darbishire, C. W.	Harris, John (Hackney, North)
Allen, R. Wilberforce (Leicester, S.)	Davies, Alfred Thomas (Lincoln)	Harris, Percy A.
Alstead, R.	Davies, Ellis (Denbigh, Denbigh)	Hartshorn, Rt. Hon. Vernon
Aske, Sir Robert William	Davies, Evan (Ebbw Vale)	Harvey, T. E. (Dewsbury)
Attlee, Major Clement R.	Davies, Rhys John (Westhoughton)	Hastings, Somerville (Reading)
Ayles, W. H.	Davison, J. E. (Smethwick)	Haycock, A. W.
Baker, Walter	Dickie, Captain J. P.	Hayday, Arthur
Banton, G.	Dickson, T.	Hayes, John Henry
Barnes, A.	Dodds, S. R.	Hemmerde, E. G.
Batey, Joseph	Duckworth, John	Henderson, A. (Cardiff, South)
Bellairs, Commander Carlyon W.	Dudgeon, Major C. H.	Henderson, T. (Glasgow)
Benn, Sir A. S. (Plymouth, Drake)	Dukes, C.	Henderson, W. W. (Middlesex, Enfld.)
Benn, Captain Wedgwood (Leith)	Edmondson, Major A. J.	Hennessy, Major J. R. G.
Birchall, Major J. Dearman	Edwards, C. (Monmouth, Bedwellty)	Herbert, Capt. Sidney (Scarborough)
Bird, Sir R. B. (Wolverhampton, W.)	Edwards, G. (Norfolk, Southern)	Hillary, A. E.
Birkett, W. N.	Egan, W. H.	Hindle, F.
Black, J. W.	England, Colonel A.	Hirst, G. H.
Blades, Sir George Rowland	Falconer, J.	Hodge, Lieut.-Col. J. P. (Preston)
Bondfield, Margaret	Falle, Major Sir Bertram Godfray	Hoffman, P. C.
Bonwick, A.	Finney, V. H.	Hogbin, Henry Cairns
Bowerman, Rt. Hon. Charles W.	Foot, Isaac	Hogge, James Myles
Bowyer, Capt. G. E. W.	Gardner, B. W. (West Ham, Upton)	Howard, Hon. D. (Cumberland, North)
Brass, Captain W.	Gardner, J. P. (Hammersmith, North)	Howard, Hon. G. (Bedford, Luton)
Broad, F. A.	Gates, Percy	Iliffe, Sir Edward M.
Bromfield, William	Gavan-Duffy, Thomas	Jackson, Lieut.-Colonel Hon. F. S.
Brown, A. E. (Warwick, Rugby)	George, Major G. L. (Pembroke)	Jackson, R. F. (Ipswich)
Brown, James (Ayr and Bute)	Gillett, George M.	Jenkins, W. (Glamorgan, Neath)
Brunner, Sir J.	Gilmour, Colonel Rt. Hon. Sir John	Jenkins, W. A. (Brecon and Radnor)
Buchanan, G.	Gorman, William	Jephcott, A. R.
Buckie, J.	Gosling, Harry	Jewson, Dorothea
Burnie, Major J. (Bootle)	Gould, Frederick (Somerset, Frome)	John, William (Rhondda, West)
Buxton, Rt. Hon. Noel	Graham, D. M. (Lanark, Hamilton)	Johnstone, Harcourt (Willesden, East)
Chapple, Dr. William A.	Graham, W. (Edinburgh, Central)	Jones, Henry Haydn (Merioneth)
Climie, R.	Greene, W. P. Crawford	Jones, Rt. Hon. Leif (Camborne)
Cluse, W. S.	Greenall, T.	Jones, Morgan (Caerphilly)
Cockerill, Brigadier-General G. K.	Greenwood, A. (Nelson and Colne)	Jones, T. I. Mardy (Pontypridd)
Collins, Sir Godfrey (Greenock)	Grenfell, D. R. (Glamorgan)	Jowett, Rt. Hon. F. W. (Bradford, E.)
Collins, Patrick (Walsall)	Groves, T.	Kay, Sir R. Newbald
Compton, Joseph	Grundy, T. W.	Kedward, R. M.
Comyns-Carr, A. S.	Guest, Dr. L. Haden (Southwark, N.)	Keens, T.
Cope, Major William	Hall, F. (York, W. R., Normanton)	King, Captain Henry Douglas
Cory, Sir Clifford	Hall, G. H. (Merthyr Tydvil)	Kirkwood, D.
Costello, L. W. J.	Hamilton, Sir R. (Orkney & Shetland)	Lamb, J. Q.
Lansbury, George	Paling, W.	Stamford, T. W.
Laverack, F. J.	Parkinson, John Allen (Wigan)	Stanley, Lord
Lawrence, Susan (East Ham, North)	Parry, Thomas Henry	Starmer, Sir Charles
Lawson, John James	Penny, Frederick George	Stephen, Campbell
Leach, W.	Perry, S. F.	Stewart, J. (St. Rollox)
Lee, F.	Pethick-Lawrence, F. W.	Stranger, Innes Harold
Lindley, F. W.	Phillipps, Vivian	Stuart, Hon. J. (Moray and Nairn)
Linfield, F. C.	Ponsonby, Arthur	Sturrock, J. Leng
Livingstone, A. M.	Potts, John S.	Sullivan, J.
Locker-Lampson, Com. O. (Handsw'th)	Pringle, W. M. R.	Sunlight, J.
Loverseed, J. F.	Purcell, A. A.	Sutcliffe, T.
Lowth, T.	Raffan, P. W.	Sutherland, Rt. Hon. Sir William
Lunn, William	Raffety, F. W.	Sutton, J. E.
McCrae, Sir George	Ramage, Captain Cecil Beresford	Thomson, Trevelyan (Middlesbro, W.)
McEntee, V. L.	Rathbone, Hugh R.	Thorne, G. R. (Wolverhampton, E.)
Mackinder, W.	Rawson, Alfred Cooper	Thornton, Maxwell R.
Maclean, Neil (Glasgow, Govan)	Raynes, W. R.	Thurtle, E.
Macnaghten, Hon. Sir Malcolm	Rea, W. Russell	Tillett, Benjamin
Macnamara, Rt. Hon. Dr. T. J.	Rees, Sir Beddoe	Tinker, John Joseph
Maden, H.	Rendall, A.	Tout, W. J.
Makins, Brigadier-General E.	Rhys, Hon. C. A. U.	Trevelyan, Rt. Hon. C. P.
Mansel, Sir Courtenay	Richards, R.	Tryon, Rt. Hon. George Clement
March, S.	Richardson, Lt.-Col. Sir P. (Chertsey)	Turner-Samuels, M.
Marks, Sir George Croydon	Richardson, R. (Houghton-le-Spring)	Varley, Frank B.
Marley, James	Roberts, Rt. Hon. F. O. (W. Bromwich)	Viant, S. P.
Marriott, Sir J. A. R.	Robertson, J. (Lanark, Bothwell)	Vivian, H.
Martin, F. (Aberdeen & Kinc'dine, E.)	Roundell, Colonel R. F.	Wallhead, Richard C.
Martin, W. H. (Dumbarton)	Royce, William Stapleton	Ward, G. (Leicester, Bosworth)
Mason, Lieut.-Colonel Glyn K.	Royle, C.	Warrender, Sir Victor
Masterman, Rt. Hon. C. F. G.	Rudkin, Lieut.-Colonel C. M. C.	Watson, Sir F. (Pudsey and Otley)
Meyler, Lieut.-Colonel H. M.	Russell, Alexander West (Tynemouth)	Watson, W. M. (Dunfermline)
Middleton, G.	Samuel, A. M. (Surrey, Farnham)	Watts-Morgan, Lt.-Col. D. (Rhondda)
Millar, J. D.	Samuel, Samuel (W'dsworth, Putney)	Webb, Rt. Hon. Sidney
Mills, J. E.	Samuel, H. Walter (Swansea, West)	Wedgwood, Col. Rt. Hon. Josiah C.
Mitchell, R. M. (Perth & Kinross, Perth)	Savery, S. S.	Wells, S. R.
Mitchell, W. F. (Saffron Walden)	Scrymgeour, E.	Welsh, J. C.
Mond, H.	Scurr, John	Westwood, J.
Montague, Frederick	Seely, H. M. (Norfolk, Eastern)	Wheatley, Rt. Hon. J.
Moore-Brabazon, Lieut.-Col. J. T. C.	Seely, Rt. Hn. Maj.-Gen. J. E. B. (I. of W.)	White, H. G. (Birkenhead, E.)
Morris, R. H.	Sexton, James	Whiteley, W.
Morrison, Herbert (Hackney, South)	Shaw, Rt. Hon. Thomas (Preston)	Wignall, James
Morrison, R. C. (Tottenham, N.)	Shinwell, Emanuel	Williams, A. (York, W. R., Sowerby)
Morse, W. E.	Short, Alfred (Wednesbury)	Williams, David (Swansea, E.)
Moulton, Major Fletcher	Simpson, J. Hope	Williams, Dr. J. H. (Llanelly)
Muir, John W.	Sitch, Charles H.	Williams, Lt.-Col. T. S. B. (Kennington)
Muir, Ramsay (Rochdale)	Smith, Ben (Bermondsey, Rotherhithe)	Williams, Maj. A. S. (Kent, Sevenoaks)
Murray, Robert	Smith, T. (Pontefract)	Willison, H.
Naylor, T. E.	Smith, W. R. (Norwich)	Wilson, R. J. (Jarrow)
Newman, Sir R. H. S. D. L. (Exeter)	Snell, Harry	Windsor, Walter
Nichol, Robert	Snowden, Rt. Hon. Philip	Wood, Major M. M. (Aberdeen, C.)
Nicholson, O. (Westminster)	Somerville, Daniel (Barrow-in-Furn'ss)	Woodwark, Lieut.-Colonel G. G.
Nixon, H.	Spence, R.	Wright, W.
O'Grady, Captain James	Spencer, George A. (Broxtowe)	Young, Andrew (Glasgow, Partick)
Oliver, George Harold	Spencer, H. H. (Bradford, S.)
Oliver, P. M. (Manchester, Blackley)	Spero, Dr. G. E.	TELLERS FOR THE AYES.—
Owen, Major G.	Spoor, B. G.	Mr. Kennedy and Mr. Warne.
NOES.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W.	Forestier-Walker, L.	Sandeman, A. Stewart
Barnett, Major Richard W.	Fremantle, Lieut.-Colonel Francis E.	Shepperson, E. W.
Becker, Harry	Gaunt, Rear-Admiral Sir Guy R.	Sinclair, Col. T. (Queen's Univ., Belfst)
Buckingham, Sir H.	Grenfell, Edward C. (City of London)	Smith-Carington, Neville W.
Burman, J. B.	Hacking, Captain Douglas H.	Thompson, Luke (Sunderland)
Cassels, J. D.	Hannon, Patrick Joseph Henry	Thompson, Piers G. (Torquay)
Chadwick, Sir Robert Burton	Hood, Sir Joseph	Titchfield, Major the Marquess of
Chilcott, Sir Warden	Kindersley, Major G. M.	Waddington, R.
Clarry, Reginald George	Lumley, L. R.	Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Cobb, Sir Cyril	Lyle, Sir Leonard	Wilson, Sir Charles H. (Leeds, Central)
Colfox, Major Wm. Phillips	Meller, R. J.	Wintringham, Margaret
Dawson, Sir Philip	Nicholson, William G. (Petersfield)	Yerburgh, Major Robert D. T.
Doyle, Sir N. Grattan	Ormsby-Gore, Hon. William
Erskine, James Malcolm Monteith	Percy, Lord Eustace (Hastings)	TELLERS FOR THE NOES.—
Ferguson, H.	Remer, J. R.	Sir Fredric Wise and Mr. Rawlinson.

Ninth Resolution read a Second time.

Mr. SPEAKER

The Amendment on the Paper, in line 4, to leave out the words 'August, nineteen hundred and twenty- four," and to insert instead thereof the words "May, nineteen hundred and twenty-five" is out of Order, as it imposes a charge.

Sir BEDDOE REES

I beg to move, in line 3, to leave out the words "and sixpence."

My main object in moving this Amendment is to call attention to what I consider to be the weak part of the Budget. The Budget may be bad or it may be good, but I do not think anybody can say it is a safe Budget. The disproportion between direct and indirect taxation as we see the proposals of the Chancellor to my mind suggests that this is not a safe Budget. It certainly cannot be defended on economic grounds. It may be popular. It has undoubtedly been framed to give something to the largest number of people. But the Chancellor has forgotten a small section of the people who require some consideration, namely, the section that has to pay Income Tax. Out of a surplus of £38,000,000 the Chancellor allots £34,000,000 in relief of indirect taxation, and about £4,000,000 in relief of direct taxation. The only real concession to industry in the Budget is the repeal of the Corporation Profits Tax. That amounts to about £2,000,000 in this year. The Chancellor tells us in a full year the Corporation Profits Tax will amount to £12,500,000. He does not tell us from where the other £10,500,000 will come to pay for it. I suggest that the point at which the Income Tax stands to-day is ruinous from the point of view of industry. When Pitt, I think it was, first levied an Income Tax in 1798, it was intended purely as a temporary expedient. It was intended to pay for the expense of the French War, but it was repealed in 1816. Until 1842 there was no further attempt to levy an Income Tax in this country. In 1842 there was the repeal of about 700 import duties, a bigger tax than the McKenna Duties. The then Chancellor of the Exchequer had to find some other means of collecting revenue, and he restored the Income Tax. In 1874 Mr. Gladstone—[HON. MEMBERS: "What did he say in 1874?"] Well, I will tell you what he said. He said in 1874 that if he were returned at the General Election that year he would abolish the Income Tax. But he did not get back. Disraeli became the Premier after the Election of 1874. He said, "I will reduce the tax from 4d. to 2d." And he did.

From then the growth of Income Tax has been marked. In the attempt to make our principles of taxation as broad as possible, there was brought about an increase in indirect taxation until it was about equal in proportion to that of direct taxation. From 1874 down to about 1900 the Income Tax never exceeded about 8d. in the £. When the Liberals came into power in 1906, they carried such beneficent measures as Old Age Pensions and Unemployment Insurance, and that was the excuse for increasing the Income Tax until it stood at about 1s. 2d. in 1914. From then onwards it mounted up and up, until in 1921 and 1922 it stood at 6s. in the £, with a Super-tax of an equal amount. Then it was found that industry could not possibly carry that burden, and the tax was reduced last year to 4s. 6d. Last year the Chancellor of the Exchequer undertook that as soon as circumstances permitted the tax would be further reduced. One does expect even a Socialist Chancellor of the Exchequer to have regard to the principles of sound finance. I am trying to show him that, although he boasts about British credit, by his Budget and by the disproportion between direct and indirect taxation, he is striking a blow at British credit, and he is certainly undermining the very basis of industry in this country. Industry can carry only a certain amount. The right hon. Member for Paisley (Mr. Asquith), who certainly was one of the beat Chancellors of the Exchequer this country has over had, laid it down, when Chancellor, that the proportion between direct and indirect taxation should be 52 direct taxation and 48 indirect taxation. Last year the proportion stood at 63 direct taxation and 37 indirect taxation. As a result of this Budget, the proportion will be about 71 direct taxation and 29 indirect taxation.

11.0 P.M.

That may be something of which a certain section will be proud. All that I suggest is that it is not good finance. It is a drag on the industry of the country, and it is the people who will suffer from it. In 1913 we extracted from industry, by way of direct taxation, £44,000,000. Last year we extracted £330,000,000 from industry by way of direct taxation. I do not object to paying it, but I want it to be distributed evenly. About four and a half million people are assessable for Income Tax, but by an ever increasing system of abatements and allowances, two million escape the taxation altogether, and so you have two and a half million paying approximately half the taxes of the country. [HON. MEMBERS: "Hear, hear!"] That may suit certain hon. Members. I am not arguing in favour of any particular section, except from this point of view, that it is not a good method, it is not sound, it is a drag on industry, and, as such, is against the interests of the working people as well as others. The present Government were returned largely because it was understood that they had a solution for unemployment. At every street corner, on every platform, in every speech, we were given to understand that their one concern was unemployment. I challenge anybody to show me in this Budget a single line which will help the unemployed. Indeed, this Budget seems to me to be designed to make unemployment worse than it was before—apart altogether from the question of the McKenna Duties. The removal of the McKenna Duties may or may not increase unemployment, but until you have reduced the burden upon industry you have not begun to solve the problem of unemployment, and the whole Budget, in my view, fails, because it has made the disproportion between direct and indirect taxation greater than it was before.

Colonel ENGLAND

I beg to second the Amendment.

In doing so I wish to claim consideration for a class which has not been helped by the removal of the Corporation Profits Tax, and that is the class of small business men. The small business man who is running his own business and is not in any way connected with a limited company finds that constant withdrawals of capital in order to meet taxation is a drain which is crippling his business, is preventing its development, and is, consequently, adding to unemployment. Instead of a diminished capital, small businesses to-day require more capital. Hon. Members above the Gangway may not think so, but it is the case. Owing to the higher prices of raw material and the larger wages now being paid, the small business man is, as I say, crippled by constant withdrawals of capital to meet heavy taxation. A reduction such as is proposed by the hon. Member for South Bristol (Sir B. Bees) would materially assist the industrialist, who is constantly being urged to be patriotic and to develop his business, but by being crippled for capital he is unable to develop the business that he would like to develop. The smaller business man is patriotic and would like to develop his business and do what he could for the benefit of his country and of the workers whom he employs. Instead of that, there is a curb on enterprise and a hindrance to opportunity. The middle class man would receive far more benefit by a reduction of 6d. on his Income Tax than by the reduction of the entrance fee to a cinema. I think the House will admit that on the whole the Budget proposals are shrewd, but, in my opinion, they are inclined to be a little bit selfish. I have no objection to anything that has been done to relieve the indirect taxpayer, but I maintain that the direct taxpayer should receive greater consideration than he has received in this Budget, and under these conditions I have pleasure in seconding the Amendment.

Mr. SNOWDEN

Probably no two Members of the House would be more surprised than the hon. Member who moved this Amendment and the hon. Member who seconded it if I said at once that I was prepared to accept it. The hon. and gallant Member for Heywood (Colonel England) said he had no objection to those proposals of the Budget which effected a reduction of indirect taxation. Therefore, what the hon. and gallant Gentleman has in mind is that his Amendment for a reduction of the Income Tax to the extent of £28,000,000 in a full year should be in addition to the tax remissions already proposed, and which apparently have his hearty support. The hon. Member for South Bristol (Sir B. Rees), who moved the Amendment, criticised the Budget proposals on the ground that they were not sound. I wonder how sound a Budget would be which maintained the tax reductions already approved by the House, and, in addition, proposed a further reduction of £28,000,000! The hon. Member who moved the Amendment said that in making my allocation of relief I had given the greatest relief to the greatest number. The hon. Gentleman speaks from the Radical Benches. I was born a Radical and nurtured in the principles of Radicalism, and one of the great aims and maxims of Radicalism, I remember, was the greatest good to the greatest number. The hon. Gentleman said that as an alternative to conferring the greatest good on the greatest number, he proposed to give the greatest benefit to the smallest number. He appeared altogether to have forgotten that the class for whom he had been specially pleading received very generous consideration from the two previous Governments. In the Budget of two years ago there was a reduction of 1s. in the £ on the Income Tax. Last year there was a reduction of 6d. The only reductions which have taken place in indirect taxation in those two Budgets were a reduction of 4d. in the pound in the Tea Duty two years ago and a reduction last year of a sum amounting to something like £20,000,000 in the Beer Duty. I thought that, in disposing of the surplus, that I had at my command this year, the time of the indirect taxpayers had come once more.

I was challenged by the hon. Member who moved the Amendment, when he asked what did my Budget do for unemployment. I will tell him what it does. I have proposed the abolition of the Corporation Profits Tax, and every deputation of commercial men who waited upon me stated that they considered that the Corporation Profits Tax was one of the obstacles in the way of a revival of trade. I have removed that tax, and by that alone, therefore, on the argument of the hon. Member's own friends, I have removed one of the main obstacles to the revival of trade. Therefore I have done something, at any rate, to encourage and stimulate employment. If one way of helping unemployment be—and this appeared to be the hon. Member's argument—to increase the purchasing power of the people, I have done that in a good many directions and by the remission of many taxes. I have not altogether ignored the class for whom the hon. Member speaks, those who pay Income Tax. I have remitted the Inhabited House Duty yielding £2,000,000 in a full year, nearly £2,000,000 this year, which is a relief to people in the lower category of Income Tax payers. Surely that amount will be available for the stimulation of trade. Therefore in that respect—I admit it is not a great deal—at least I have done something to encourage employment. That is not all. The indirect taxes I propose to repeal will give the working people of this country, in the main, an additional purchasing power of about £30,000,000 a year. If you want to encourage trade, the way to do it is not to put more spending power in the hands of a few people, but to put more spending power in the hands of the greatest number of people, whose expenditure will be in support of the staple industries of the country. If you relieve the Income Tax payer the chances are 20 to 1 that the relief you give will not be expended in that way, but that the increased power of spending will be devoted to luxuries, because they already have sufficient of the necessaries of life and already take as much as they can consume of the necessary commodities. Therefore I submit that to give the £30,000,000 in indirect taxation, to benefit the greatest number, is doing an enormous amount to help trade and to lessen unemployment; much more than if I had given a similar amount to the relief of the Income Tax payer.

Of course, it is quite impossible that I could make this concession. The hon. Member who seconded this Amendment did not expect that I was going to yield. That was quite evident. I make no complaint of hon. Members in putting forward this Amendment, for with an Income Tax nominally of 4s. 6d. in the £, it is quite right that the attention of the House of Commons should be directed to that matter whenever the opportunity may come. I said, in the course of my Budget statement, that although I could not do anything this year in the way of reduction of the Income Tax, it must not be assumed that I looked forward to the maintenance all the time of an Income Tax at the basic rate of 4s. 6d. All I can say is I cannot do anything this year. I have applied the surplus to other purposes, which, I believe, will confer far greater benefit than if I had given it to a reduction of 6d. in the £ on the Income Tax.

Mr. G. LOCKER-LAMPSON

I want to support this Amendment on rather different grounds from those already mentioned, and I hope in what I shall say I shall carry the agreement of the whole House. What I feel is that we have no right to put on this 6d. Income Tax unless it be absolutely necessary. [HON. MEMBERS: "We are not putting it on!"] I mean the 6d. we wish now to take off. I am afraid I may have expressed myself badly. What I say is we have no right to place this 6d. tax, that this Amendment wishes to take off, on people, unless it be absolutely necessary, because, after all, taxation in itself is bad. There is no argument in favour of taxation unless it be absolutely necessary for the benefit of the community. I do not believe this present rate of Income Tax is necessary, and I want for a few moments to develop the reason why I say so. I believe at the present moment there is an enormous evasion of Income Tax, and if that evasion were stopped, a lower rate of Income Tax would be possible. The Financial Secretary was a distinguished member of a very important Commission, and I think I am right in stating he signed a Report, and he signed a Clause, which stated that evasion of Income Tax probably amounted to between £15,000,000 and £100,000,000 a year.

Mr. W. GRAHAM

My hon. Friend will agree that there must be no difference of opinion between us on the facts. The Royal Commission indicated, I think on the advice of the Surveyors and others, that over a period of about four years, including Excess Profits Duty, probably £100,000,000 had been lost, but the loss through evasion was put at a lower sum than that, namely, from £5,000,000 to £10,000,000 per annum. I think the hon. Member will find that those figures are correct.

Mr. LOCKER-LAMPSON

As a matter of fact, I read that particular clause this evening. One witness stated that in his opinion there was a loss of £100,000,000 a year. Other witnesses said they believed there were losses of about £17,000,000 a year, and I agree one estimate went as low as £5,000,000. We are told by the right hon. Gentleman that this concession would cost about £28,000,000 a year. Therefore, I think I am right in saying that if you did your best to stop this leakage, and got rid of evasion, you would go a very long way to be able to accept this Amendment. In losing this amount of revenue you are adding to the burden of those who pay their taxes honestly. I should like to give three instances, be- cause I am quite sure the Chancellor of the Exchequer and the Financial Secretary are just as anxious as anybody else to stop evasion. There is at the present time a complete lack of co-ordination between the Inland Revenue Department and the various Public Departments that assess their own income tax. Take the Ministry of Labour, the India Office, and the War Office. The official in those departments fills up his income tax form, showing the total income received from salary and from foreign income in the department, but the whole of that income is not assesed for tax, but only his salary or pension is taken into account. In these departments no tax whatever is paid upon foreign income. I believe the Admiralty have a system by which they do see that tax is paid upon total income; but in the other departments—so I am advised, and I am saying what is accurate—no account whatever is taken of foreign income shown on those returns.

Again, I believe that at the present time there is practically no co-ordination between the ordinary Inland Revenue Department and the Supertax Commission. When a person fills in his form, page 3, showing his total income, if it is over £2,000, the Inland Revenue takes no notice of the extra amount, and does not let the Supertax Commission know about it. A person, merely depends upon getting a request from the Supertax Commissioners to say what is his income. My information comes from the people engaged in the work. I believe a great deal of income is lost in this manner. My final instance is this: At present the banks do not return the interest they pay on deposit and current accounts. One of the recommendations of the Commission was that all banks should send an account of this. When the bank becomes a trustee it immediately has to show it. Very large sums in interest are paid by banks—I happen to know—which pay absolutely no tax whatsoever. I hope the Chancellor of the Exchequer will look into this question and that he will carry out the recommendations of the Commission in this respect. I am quite sure that if it is possible to have these leakages stopped we shall be able to get a reduced taxation for those who pay their taxes honestly.

Mr. WALLHEAD

It is very curious how hon. Members opposite and below the Gangway hug their peculiar fallacies to their bosom with regard to the effect of reducing the Income Tax. In their view the reduction of the Income Tax has been one of the principal means, for the last five years, of reviving industry. It was one of the stunts some time ago of the newspaper press, particularly one issued from Carmelite House, which urged their supporters in this House to press for a reduction of the Income Tax on the ground that it would cause the wheels of industry to revolve once more. They had other stunts as well. The year before the last there was a reduction of the Income Tax by 1s. in the £, equal to £50,000,000 a year, but nobody noticed that this made the wheels of industry revolve any more. The same demand was made next year, and the taking off the Income Tax of another 6d. was to be the cause of a wonderful revolution so far as the wheels of industry are concerned, and although £26,000,000 went to the Income Tax payers the wheels of industry did not do any more revolving and even the Board of Trade figures did not show it. Now we are told that if we take off another 6d. the wheels of industry are sure to go round this time. In my view the best way to make the wheels go round is to increase the purchasing power of the masses of the people.

That leads me to another stunt supported by the Opposition and also by some hon. Members below the Gangway and it was to reduce wages in order to develop trade. This was done and the Board of Trade figures show that wages during the last four years have been reduced by £700,000,000. The result was that wheels of industry did not revolve any better because you cannot do that without some improvement in the purchasing power of the people. You want to improve your home market. [HON. MEMBERS: "Hear, hear."] Hon. Members opposite who cheer that remark are the very people who advocated its destruction. We are going to be told to-morrow something about foreign competition in the motor car trade, and the hon. Member who moved this Amendment drew comparisons between the amount paid by indirect taxpayers to-day and during the time of Peel and Pitt. It is notorious what an enormous increase there has been in the fortunes of individuals to-day as compared with 60 or 70 years ago. Justifi- cation for war taxation and for more direct taxation was provided in a Paper issued by the Chancellor of the Exchequer last year when he gave figures with regard to the income of individuals. I believe his Paper showed that in 1914 there were, in round figures, about 14,000 people paying Super-tax on £176,000,000, while last year the number of Super-tax payers had increased from about 14,000 to about 70,000—

Sir W. MITCHELL-THOMSON

The Super-tax limit has been altered.

Mr. WALLHEAD

—and those 70,000 persons were paying Super-tax, not upon £176,000,000, but upon £470,000,000 of income.

Mr. A. M. SAMUEL

I am sure the hon. Gentleman would not like to mislead the House, but he is leaving out of consideration the fact that in 1914 the people assessed to Super-tax had incomes over £4,999, whereas the number assessed last year must have been much greater, because the assessment came down as low as £2,000. That is a very great factor in the argument.

Mr. WALLHEAD

Even allowing that to be correct, I do not think it destroys the argument, nor do I think that the number of persons paying on incomes between £2,000 and £5,000 would account for the enormous increase.

Sir JOHN MARRIOTT

Of course it does.

Mr. WALLHEAD

The Chancellor of the Exchequer recently, in answer to a question, gave the number of Super-tax payers with incomes of over £5,000 a year, and also the corresponding number in 1913. In 1913 there were 14,008 persons assessed to Super-tax with incomes of over £5,000 a year, while in 1920–21—the last year for which the Chancellor had the information—there were 27,499, or practically double. There is the justification for increased direct taxation—the enormous increase of individual fortunes. If hon. Gentlemen question that, let them go to the Death Duty returns, and see there whether what I say is not true. When I was a boy a millionaire was considered to be a rarity, but to-day they have become almost as plentiful as blackberries in September, while, as far as one can tell, the mass of the people remain pretty well where they were, so far as poverty is concerned, 50 years ago. The mass of the people are left always tottering on the edge of poverty. To the mass of the people a reduction of 2d. a pound on sugar comes as almost a God-send to assist them out of the poverty in which they have been placed. When I hear the representatives of such corporations and rich men complaining of the way they are hit by taxation, I think of the men I represent working in the coal trade, many of them working for a wage of 30s. a week in a dangerous occupation. Regret is expressed that they have some slight relief against the Income Tax payer. You cannot have it both ways. I stand here to speak for a loyal body of men. After all, the Chancellor of the Exchequer has allowed rich people a reduction even on their wages bills for their domestic staffs because dutiable articles consumed by the domestic staffs are costing less. In so far as the food they consume is part of their wages their wages are reduced, On the whole they have very little to complain about taking one thing with another and taking the reduction of last year and previous reductions, and the time has come when the people we represent should have their share of reductions.

Sir FREDRIC WISE

I regret that I cannot follow the hon. Member in all his arguments, but I should like to point out to him that certain of them are absolutely wrong. In the case of the Super-tax I wish this country had doubled or trebled the number of supertaxpayers. The more capital and the more credit there is in the country the better it is for employment. The hon. Member said that reductions in Income Tax had done nothing for unemployment.

Mr. WALLHEAD

I said as far as one could see there is not a great deal of improvement in industry.

Sir F. WISE

The hon. Member does not realise that in 1921 there were over 2,000,000 unemployed and to-day there are 1,100,000. That is what the reduction of direct taxation has done and the hon. Member really should not use an argument of that sort that the reduction of direct taxation has not reduced unemployment. I quite agree that the Chancellor of the Exchequer can make no concessions to the hon. Member for South Bristol (Sir B. Rees), but I admire the hon. Member for bringing this forward. I do not think many members of the Labour party realise this great burden of taxation. They are not feeling it. If they only realised that in seven years we spent more than in the two previous centuries they would realise that taxation must be heavy. You cannot get a reduction in taxation, except through revenue, and you can only get your revenue through taxation. The hon. Member for Merthyr (Mr. Wallhead) said that in regard to the unemployed they were really benefiting from the relief of indirect taxation. I cannot help thinking that, while the relief of indirect taxation gives purchasing power, the relief of direct taxation gives purchasing power and gives more chance of employment for the unemployed than is the case when you give remission of indirect taxation. The Income Tax is the sheet-anchor of our taxation, as it always must be, because we think it is the fairest means of taxation. So long as we tax people fairly, the use of the Income Tax is the right policy for any Chancellor of the Exchequer to adopt, but do hon. Members realise the enormous sums that have been taken from the Income Tax and Super-tax payers? In the last five years the Income Tax and Super-tax payers have paid £1,800,000,000. If we include the Excess Profits Duty and the Death Duties, the amount is £2,696,000,000. In spite of this we are the heaviest taxed country in the world.

I notice in a very interesting publication, the "Empire Parliamentary Journal," a comparison of the taxes of the Dominions and of this country. The figures were given in the Canadian House of Parliament on the 14th March, and they show how heavily we are taxed in comparison with the great Dominion of Canada. The figures as to Income Tax were given by the Minister of Justice of the Canadian Parliament. If we change dollars into pounds, at the rate of 5 dollars to the pound, we find that on a £600 income a year Canada is taxed £8, Great Britain £49, Australia £24, and New Zealand £31. If we take an income of £4,000 a year, we find the Canadian is taxed £418, Great Britain £983, Australia £589, and New Zealand £1,129. If hon. Members will look at that publication, they will see how heavily taxed we are compared with Canada.

Mr. E. BROWN

Ought not the hon. Member to take into consideration the money paid in interest on War Debt?

Sir F. WISE

I suggest that the hon. Member should read the statement of the Canadian Minister of Justice in the "Empire Parliamentary Journal"; he will find it most interesting. There is one further matter of importance, and that is in regard to double Income Tax, which affects this country very seriously. If hon. Members will go into this matter, they will see how very heavily even certain hon. Members of this House are taxed through double Income Tax. The Financial Secretary to the Treasury knows all about the double taxation, because he was on the Royal Commission. In the old days, when the Income Tax was small, the question of double Income Tax was not recognised, but in these days of high Income Tax the double Income Tax is hitting us very hard. It is not only hitting the people who are liable for this double taxation, but in other ways has serious results, as, for instance, in the case of companies who have their offices in London, leaving London to go to places where their industry is built up. Suppose that there is a nitrate company in Chile. The company has, say, Chilian shareholders as well as British shareholders. Instead of conducting their affairs at their office in London, they transfer the office to perhaps Chile. I believe that Chile has just started a small income tax, but such a development affects this country. It means that when manufactures and goods are required and the office is transferred the goods, instead of being bought in this country, are purchased in such countries as the United States of America or elsewhere instead of being purchased in England.

One other point in regard to double taxation and the British Argentine railways companies. These companies were floated here and most of the stocks and shares are held in this country. The Argentine does not invest in those railways without being subject to our income tax. There is no income tax at the moment in the Argentine. So he says "Why should I invest in these railways?" If there is any threat to raise tariffs in the Argentine the Argentina has no monetary interest in the British Argentine railways and other British Argentine Companies in that country, and he is not interested in this tariff affecting the company. It is only British capital that is involved. What we want to have is the Argentine investing his money in the British Argentine railways. This double taxation is one of the most important and difficult problems to be considered in this country. We want the foreigners' money in this country, but you have to consider whether you are going to tax at the source or at the residence.

In this connection I would refer hon. Members to the important report on this subject issued as the result of the inquiry held under the auspices of the League of Nations. Very eminent names are connected with this report. There was a representative of the Commercial University of Rotterdam, one of Turin University, one from Columbia University, New York, and Sir Josiah Stamp of the London University. The only trouble about the report is, that one has to read it three or four times to grasp what these experts have said in the report as it is so technical. I do press on the Chancellor of the Exchequer the necessity of forming a Committee as soon as possible to go into all these matters. In the "Times" last week it was reported that a Committee had been set up. If this is so I would like the right hon. Gentleman to tell us who are on that Committee. It is a difficult technical question which affects us in this country in a large way. In conclusion I congratulate the hon. Member for South Bristol on bringing this matter of the burden of taxation forward at the present time, though perhaps he may not press his Amendment to Division.

Sir GODFREY COLLINS

The hon. Member has reminded the House of the heavy burden borne by the taxpayers in this country. It is for that reason that we are opposed to the preference proposals which would place further burdens on our people for the relief of the people in Canada. If I followed up that argument I might be ruled out of Order, but I would remind the House that this is the third Budget since the War, in which there have been reduced taxes. As a result of the three reductions which have taken place during the last three years, the direct taxpayer receives a larger benefit than the indirect taxpayer. During the last three years the direct taxpayer has received yearly relief to the extent of £104,000,000, while the indirect taxpayer is only receiving relief to the extent of £60,000,000. If this Amendment was carried, the benefits to the direct taxpayer would be increased to the extent of £130,000,000, whilst the indirect taxpayer, as a result of the last three budgets, including the present, is only receiving relief to the extent of £60,000,000. I submit, therefore, from these figures that the Chancellor of the Exchequer has been well advised in reducing largely the burden on the indirect taxpayer this year.

But there is a very general impression that the indirect taxpayer has received practically the sole concession. In a full year the Chancellor of the Exchequer's proposals grant by way of relief to the indirect taxpayer £38,000,000, and to the direct taxpayer £14,000,000. For every 20s. granted by way of relief to the indirect taxpayer the direct taxpayer receives relief to the extent of 7s.. The Chancellor of the Exchequer, therefore, has not forgotton the direct taxpayer when he came to frame his Budget. Before sitting down, let me say how glad I was to have the assurance of the Chancellor of the Exchequer that he is hopeful that in the coming year, when he presents his next Budget, he may be in a position to grant further relief, not only to the indirect taxpayer but to the direct taxpayer as well.

Mr. A. M. SAMUEL

The point I wish to raise is an entirely non-contentious one. When the Chancellor of the Exchequer opened his Budget he told us that he had been able to convert £150,000,000 five per cent. War Loan into a debt at a lower rate of interest—a 4½ per cent. loan subject at the source to income tax at the time the interest is paid. The 5 per cent. War Loan was specifically excused payment at the source in regard to Income Tax, and the income tax upon the dividends was assessed a year later. There was an arrangement made (Finance Act, 1921, Sect. 27), and I made the suggestion to my right hon. Friend the Member for West Birmingham that he should allow those who wished, to have their Income Tax taken off the interest of the 5 per cent. War Loan at the source to save trouble. The consequence is that those who have not availed themselves of the right to have the Income Tax taken off their dividends at the source of the 5 per cent. loan will now, in a year in which they are paying Income Tax on their 4½ per cent. Conversion Loan, be compelled to pay Income Tax upon the same capital twice in the same year. That is a hardship. We have to think of little men who have a very few pounds. That is a hardship which was not foreseen when the Conversion Loan was issued. If the Chancellor of the Exchequer does not give some sort of amelioration, it will prevent him converting other loans in future. There is no desire on the part of the holders of the 4½ per cent. loan to escape their duty.

Mr. SPEAKER

Does this really arise on the Resolution? I should have thought not.

Mr. SAMUEL

Of course, Mr. Speaker, I entirely accept your ruling, my point is that as the Chancellor of the Exchequer is now moving these charges I thought this was a convenient time for him to reassure the public on the matter.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution"

Mr. JAMES HOPE

There are two points I wish to pub to the Financial Secretary to the Treasury with regard to some of the recommendations of the Royal Commission on Income Tax, of which he was a distinguished member. The first question is, Have the Government any intention of altering the income tax year? It is anomalous and inconvenient that the income tax year should be different from the financial year. Hon. Members will recall how this arose. It is a survival from the pre-Gregorian calendar. Formerly the year ran to 25th March, and that date was the end of the year. When the calendar was re-formed and the eleven days were taken away, 25th March became 5th April. The later date remains for the purpose, of income tax but not as regards the financial year. The Royal Commission thought this exceedingly inconvenient and recommended a change. Are the Government prepared to carry that recommendation into effect?

Another question concerns the profits made by foreign persons or associations through their agents in this country. So far as I know, that has not been dealt with at all, but it seems to be a very obvious reform, and one which was insisted upon by the Royal Commission. Yet years have passed and nothing has been done. Then there is the question of the assessors of Income Tax. Personally, I have no strong feeling in regard to them, but the Royal Commission felt that they were an unnecessary part of the machinery of collection, and could very well be dispensed with. Lastly, there is the anomalous position that in certain respects the duties of the Commissioners of Income Tax are administrative, while in other respects they are judicial. The Royal Commission very justly pointed one that this union of judicial and administrative functions was not for the public interest, and they recommended that the Commissioners should be relieved of the administrative functions. Various other points of the Royal Commission Report were urged at the time, and were actually put into a Revenue Bill, but nothing more was heard of it. I would be glad to know whether the Government have considered these four points, anl whether they are prepared to put any Clauses into the Finance Bill dealing with them.

12 M.

Mr. GRAHAM

The right hon. Gentleman will expect only a word or two in reply. It is quite true that the Royal Commission in 1919 made a large number of recommendations, and in the following year, 1920, effect was given to some of those recommendations, which involved an immediate change in the structure of the Income Tax. That is from the point of view of the exemption limit for married people and others, and certain other changes. The points which have been put by the right hon. Gentlemen fall into two categories. There are on the one side certain suggested changes dealing with foreign parties doing trade here, and also another point which the right hon. Gentleman mentioned with reference to the Income Tax year, and on the other side there are proposed administrative changes dealing with assessors and the duties of the Commissioners of Income Tax. On that, I regret for many reasons my reply must be disappointing. We have proposed Amendments from the other side of the House during recent years but unfortunately they have not been adopted, as regards the machinery of administration. There was a scheme in the Revenue Bill promoted by the Coalition Government but it excited so much opposition that it was not proceeded with.

Mr. HOPE

I do not think the opposition—unless it be in the case of the assessors—was in regard to any of the points which I have put forward.

Mr. GRAHAM

No, but the right hon. Gentleman will agree that there are certain interests in the existing system which made themselves very vocal when the Revenue Bill was produced and quite frankly, at that time although I was a very warm supporter of the Bill, I did not see that it had any chance of success. I cannot at the moment say what we will be able to do in the forthcoming Finance Bill on the points which the right hon. Gentleman has raised, but there will be opportunity in the House to move Amendments and take other steps to direct attention to these questions. We have been a very short time in office and, as the right hon. Gentleman knows, some of the matters dealt with by the Royal Commission are highly controversial and have changed in form between 1919 and the present day. I can assure the right hon. Gentleman the Commission's findings are being very carefully borne in mind. My own impression is that at an early date the findings of the Commission must be considered unless a very large part of the work of the Commission is to go for nothing.

Mr. HOPE

May I put this point. The hon. Gentleman suggests that Amendments may be moved to the Finance Bill in Committee but, on the question of the foreign agents, at any rate, no Amendments would be in order unless something is put into the Resolution, as it would be a new charge.

Mr. GRAHAM

That, I am afraid, would be the case. On the particular question which the right hon. Gentleman has just mentioned, there are large issues involved and a good deal of inquiry has been made into the position of foreign bodies and foreign individuals. There are far-reaching difficulties of reciprocity in this question on a discussion of which I need not embark. I only mention that fact to indicate the difficulty of achieving reform in this respect.

Sir J. MARRIOTT

I do not propose to pursue the more or less minute point which has been raised by my right hon. Friend, but I do not think that we on these Benches should allow the general argument that was advanced by the Chancellor of the Exchequer to-night to go unchallenged. The Chancellor of the Exchequer based his defence of this portion of his Budget on two large propositions, first of all, that he was considering the greatest interests of the greatest number in his allocation of relief between the direct and the indirect taxpayer; and, in the second place, that he was in a very real measure promoting employment. I want directly to challenge both those statements, and I am very sorry that the hon. Member for South Bristol (Sir B. Rees), and those who are associated with him in this Amendment—I understand their reasons, of course—did not press it to a Division for this reason. The whole of the argument of the Chancellor of the Exchequer rested, to my mind, on this fallacy. He was presuming that indirect taxation is paid only by those who are consumers, while direct taxation is paid only by the relatively small number upon whom it is assessed. I want directly to challenge that assumption, and I suggest to the Chancellor of the Exchequer and to the House at large that no greater benefit can possibly be distributed to the great masses of the people of this country than to relieve the pressure on direct taxation, which, at the present moment, is pressing so hardly on industry.

It is a total misconception of the incidence of taxation to suppose that direct-taxpayers are alone suffering from this heavy tax to-day. That is by no means the case. The very best help you can give to industry to-day is to relieve the very heavy burden which rests upon the direct taxpayers of this country. I am afraid I shall find it very difficult to convince hon. gentlemen opposite, but, with great submission, I say that that is because they have not followed this thing out. If they would follow it to its ultimate conclusion, they would see that there is an immediate benefit, and that there is an ultimate benefit, and that the ultimate benefit of relief of direct taxation would be precisely to make the wheels of industry again revolve. I do not think hon. Members opposite will attempt to deny the fact, because they cannot, that the remissions which have been made in direct taxation have been promptly and immediately reflected in an improvement in the unemployment figures. In 1920, as my hon. Friend the Member for Ilford (Sir F. Wise) pointed out, there were 2,000,000 unemployed in this country. At that time the tax was 6s. in the £. A shilling was remitted, and the numbers dropped. I am very sorry the hon. Member for South Bristol did not push this matter to a division.

Mr. KEENS

I beg to move, in line 2, to leave out from the word "after" to the word "the."

What is the object of the words it is proposed to omit? It is another case, and a very bad case indeed, of retrospective legislation in taxation. Last Monday the question was before the House and on that occasion the President of the Board of Trade raised the moral question as against the legal question and appealed to this House to set aside the judgments which had been obtained in the Courts against the Crown, on the ground that bargains had been made, that services had been rendered and that all that would happen would be a return of money to a number of people who had made profits and had passed the charges on to the consumer. No such circumstances arise out of this question. About 240,000 of the smaller employed Income Tax payers are affected by the terms of this Resolution and it means to them an absolute denial of rights. Under the Finance Act, 1918, perquisites, as they were called, were liable for assessment either on the income of the last year or on an average of the three preceding years, at the option of the taxpayer. Under the Finance Act, 1922, this was abolished and the perquisites, or variable income, were brought in for assessment within the year of assessment. The people affected by this Amendment do not ask for further legislation. They accept the position, but they say that the rights they have in respect of assessments for the financial years 1920–21 and 1921–22 should remain unaffected. The Finance Act, 1922, was not retrospective in its operation, but we have now retrospective Amendments brought into this Resolution. Why? Because in the meantime the House of Lords in the case of Macdonald v. Shand has given a decision, in a particular case, that variable fluctuating income was "perquisites" within the meaning of the Finance Act of 1918.

Briefly, the particulars of the case were that Mr. Macdonald, the Manager of Nobel's, was entitled to a fixed salary and a fluctuating bonus dependent on the profits of the year. The Revenue authorities claimed that this bonus should be assessed in the year of assessment, although it was perfectly obvious that no fluctuating bonuses of this description were impossible of assessment within the year of assessment, because at the time the taxpayer makes his return he cannot know what his income for the year will be. On the other hand it was stated by Mr. Macdonald that this fluctuating bonus was a "perquisite," that it came within the Finance Act of 1918, and that he was entitled to the option under that Act of being either assessed on the amount of income for the previous year or on the average for the previous three years. That decision was upheld by the Scottish Courts, and on appeal from the Scottish Courts to the House of Lords the decision was confirmed by that House. Following on that decision, many claims were made successfully, and repayment had been made to large numbers of taxpayers. Now, who are the persons actually affected? They are municipal servants, the servants of county and other local authorities, Government servants, and men employed on the railways or in any way where they have salaries which come under the Civil Service award, or any similar award, and are entitled to a War bonus, which varies with the cost of living A large number of these men are taxed by deduction from their salaries, and up to 1922 no account was rendered to them to show what allowance was made, or on what basis the assessment could be calculated. The case of the Civil Service and of these other people is that the case of Macdonald v. Shand does apply, and they are so advised by some of the leading specialist King's Counsel in this country These people were deprived of their rights, because having in the years 1920–21 and 1921–22, been taxed by deduction, they had no right to appeal. It is admitted— it cannot be denied on any ground whatever—that the average for those years was less than the income for those years, for up to that point the bonus was rising, and therefore if this Resolution be carried, those taxpayers will be denied the right to which they were clearly entitled under the case of Macdonald v Shand. It is taking away from a large class of the community—one of the best classes of the community in some re-respects—the rights to which they are entitled.

The Government point of view is likely to be that the decision is not applicable, and that the cost of living bonuses are not, and cannot be, perquisites within the meaning of the Act of 1918, but that if it be applicable, retrospective legislation is necessary. Two questions have been asked in the House, the replies to which indicate the attitude of the Government. On the 25th March last the hon. Member for South-East Ham (Mr. Barnes) asked the Financial Secretary to the Treasury a question on this subject, and, in reply, the Financial Secretary said he was aware of the claims that had been made, and he was advised that the contention put forward was not sustainable in law. He added that if any attempt were made to remedy this, it would increase the inequalities. That proposition I deny, and, on the question whether these war bonuses are perquisites, may I call attention to the decision of Viscount Finlay, which seems to me to settle the question whether they are or are not. My own justification for quoting these words is that I know this particular judge is relied upon by very eminent K.C.'s as settling the question as to whether these war bonuses are perquisites within the meaning of the Act, Lord Finlay said: The profits are to be such profits as arise from fees or other emolument in the course of executing such offices or employment. There is nothing that I can find there to denote that the fee or perquisite is to be payable on the doing of a particular act. In most cases I daresay it will be so, but it is quite enough if it is a payment which arises in the course of employment. On that basis it is the belief of a very large number of taxpayers that they come under the head of "perquisites" in the Act of 1918. If these assessments were incorrectly made at the time, remember the amount was deducted, and those concerned have never had the benefit. The Government decision appears to be that the assessments were rightly made at the time, and if not rightly made, then "we shall have to pass legislation barring claimants, whether right or wrong." The Financial Secretary goes on to say there are analogous cases. I submit that he will not be able to suggest any analogous cases in which taxing legislation has been made retrospective. As a matter of fact all the cases wherein there has been a change in the methods of assessment, or any similar matters, have not been retrospective; the claims have been admitted and repayment made. There was the case of Stevens versus Bousted, which was reversed by Section 26 of the Finance Act, 1918. That decision had something to do with certain expenditure in connection with foreign business to be set off against British Income Tax. It was reversed by the Act of 1918. It was never made retrospective, and claims were allowed. There was another extraordinary case, the National Provident Versus Brown. That was a case in which the flaw was subsequently discovered. That was reversed by the Finance Act of 1922.

My point is this, again, that notwithstanding the reversal by the Finance Act, 1922, the repayment was not made retrospective, and there is no real precedent for making the matter retrospective in this other sense. I suggest that this retrospective legislation is of a most vicious character. The assessments have been made by the Revenue Authorities, and by a misinterpretation of the law, and the House of Lords in the case of Macdonald versus Shand, has laid down the correct principles of assessment in this particular case. The vast majority of the small employed tax-payers have had the benefit in assessment, and the minority have not. Some are entitled to redress, and some are not. One point only is left; and that is to deal with the reply of the Financial Secretary to the Treasury as to inequality. I submit that that inequality exists, and that retrospective legislation such as now contemplated will increase and not decrease that inequality, and as a measure of simple justice to a very large class of employed tax-payers I move this Amendment, and I sincerely hope the House will insist upon carrying it.

Mr. GALBRAITH

I beg to second the Amendment.

I do not think that the House should dispose of this matter without very careful consideration, and we should make a stand against this retrospective legislation. Until quite recently there were only two cases in which retrospective legislation was considered justifiable. The first was one recognised in various Acts of Indemnity where the Government of the country had acted properly though not legally in time of stress and they had to take steps to ratify what had been done. There is the Recital in the Act of Indemnity of 1745 which puts the basis of this kind of legislation in the clearest possible terms. It lays down that it was reasonable that acts done for the public service, thought not justifiable by the strict forms of law should be justified by Act of Parliament. That is the first case in which this country authorised retrospective legislation. Another case is where a large, number of persons have honestly acted upon a mistaken view of the law and to prevent multiplicity of actions that view is afterwards confirmed by Act of Parliament. Apart from those two cases retrospective legislation has always been abhorred in this country. What is proposed now? In the financial year 1924–25 we are imposing retrospectively upon a small portion of the community composed of poor persons further taxation than is borne by other members of the community. For the financial years 1919–20 and 1921–22 these persons will have to pay an additional amount of Income Tax contrary to the decision of the House of Lords in the case of Macdonald v. Shand. I do not think that such a course has before been adopted by the House of Commons and I ask hon. members not to adopt a course like that which is contrary to every precedent adopted up to now in this country.

Mr. GRAHAM

I regret very much that an important, and from many points of view difficult, subject has been reached at so late an hour. I ask for the patience of hon. Members, largely because, as the House knows, we must get the Resolutions to-night as the business for the week is now arranged. This case undoubtedly raises the question of retrospective legis- lation. Let me say at once that our attitude towards retrospective legislation is that it should be avoided as far as possible, unless conditions which justify retrospective legislation are fulfilled. I am going very briefly to summarise the facts of this case, and then I hope to be able to show the House that if this Resolution be not passed in the form in which we have submitted it, the injustice resulting from the absence of a Resolution of this kind would be very much greater than any hardship which can be inflicted by its incorporation in the coming Bill. The simple facts of this case have been summarised by the hon. Member for Aylesbury (Mr. Keens) who moved the Amendment. The position is that in the action Macdonald v. Shand, Shand was employed at a salary and at certain remuneration by way of perquisite based on the profits of the company. He was entitled to a salary of £4,000 a year at least, but the material point is that his perquisite was a fluctuating element based on the profits of the concern. There was, of course, no doubt about the salary itself being on a basis of the year of assessment and, according to the legislation which preceded the Income Tax Act, 1918 and which was continued by that Act, he was entitled to have the bonus, or the perquisite, assessed either on the basis of the preceding year or on the average of three years. It so happened that he was, in the first instance, assessed on salary, on the usual basis then, with the average of this perquisite. Notice was subsequently served on him of the assessment of the perquisite on the basis of one year. The case was heard in June, 1922. The Court of Session in Scotland decided in favour of this income tax payer and the position was subsequently upheld in April, 1923, on appeal to the House of Lords.

I summarise these facts to direct the attention of the House to what appears to me and the Government to be a substantial difference between what was really involved in the case, and what is now put forward under the head of war bonus, to which it is proposed to apply this decision. This was a perquisite fluctuating with the profits of the company; it was something irregular and indeterminate in character, and certainly it was far removed from the position of the war bonus of civil servants, rising and falling in keeping with the rise and fall in the cost of living. If hon. Members will bear with me, they will see that, in fact, the bulk of these cases turns upon civil servants who are claiming the benefit of the judgment in the Macdonald v. Shand case. There is a very great distinction, in my judgment, in this matter—in the mere facts of the case—the distinction between a business perquisite, or profit of that kind, and the Civil Service war bonus fluctuating with the rise or fall in the cost of living.

After this decision was known claims were put forward, particularly by classes of civil servants in this country, and I think also by certain other people in kindred occupations, arguing that their war bonus was entitled to be averaged in the manner which had been settled by this decision. Let me draw attention here to an undoubted difficulty in the case of civil servants who are involved. The House knows that the practice of assessing Income Tax on civil servants differs materially from the practice of fixing Income Tax for other classes in the community—in fact, the procedure is archaic and out of date, and there is always the question of whether these Departmental assessments have become final and conclusive, which is very important, as everyone knows who is familiar with Income Tax terms. We have to recognise this indeterminate character of Civil Service assessments. There is not the least doubt that the overwhelming majority of civil servants in this country accepted the basis of the year of assessment. It never occurred to them that it could be applied to war bonus given in respect of the rise and fall of the cost of living; that it could be put forward for the purpose of average which did not apply to the salaries of the group. The war bonus was regarded as a kind of part of the salary in a sense in which we cannot regard the perquisite in Macdonald v. Shand.

Of course it is perfectly obvious to them that if we are to regard the war bonus of civil servants as a perquisite, very interesting questions will arise when consolidation of salary and war bonus is faced. That will be the case for civil servants and other people in this country, and I am perfectly sure they themselves would not describe it as a perquisite in that sense. There is an indeterminate character in the class of assessment, but in so far as assessments were final and conclusive, and in so far as these have been final and conclusive for other people in the community, I do not think there can be any doubt about the position. But there was the Act of 1918. That, as I have said, merely continued the legislation on this point. Rule 4 says a perquisite may be assessed either on the profits of the preceding year or on an average of the previous three years, I do not think, when we go into the facts, that this war bonus comes into the category at all. It must be viewed as salary, as part of the major thing which quite clearly was assessable on the basis of the year of assessment.

That brings me to the remaining stages of this Question. The House knows that in 1922, in the Finance Act of that year, Rule 4 was abolished or repealed, so that quite clearly this Question cannot arise in any year after that date. That is perfectly plain. I think it is common ground now that as regards the period before that date it cannot possibly apply to any assessments on becoming final and conclusive, because the House will admit it is the settled practice in the Income Tax in this country that, where an assessment has become final and conclusive, no subsequent legal decision has ever been used to reopen it, and I do not think anyone could put forward a proposition of that kind. If these facts are admitted it becomes plain that only a limited class can get the benefit of the absence of a Resolution of this kind and the subsequent Clause of the Finance Bill, that is, only that class in the community whose assessments have not become final and conclusive, and the class whose assessments for years prior to 1922, became final and conclusive. When I have put the case in that way I think I may ask the House to see the inevitable irregularity that would arise. A section in the Civil Service would get the benefit to the detriment, it must be, of other civil servants, or at any rate other civil servants would not have the same claim, and outside the Civil Service only that section whose assessments were not final and conclusive would have any place at all. You would, therefore, have a manifest irregularity and real injustice among the very same class of taxpayers. I think I have only to put that to the House to see that this Resolution is justified.

It is my duty to tell the House quite frankly that it is quite possible, if this Clause were not incorporated in the Finance Bill, that we should have to find £3,000,000 to meet these Civil Service claims. That is a large sum of money, but the House would not grudge it if the claim were just, or if it resulted in equity. What the cost would be in other spheres I do not know, but undoubtedly it would be very large. So that both on the practical case on what would emerge if we did not take this step in the Finance Bill, and on the actual cost in the absence of a clause of this kind I think I have made a case for this retrospective legislation. If we do not pass this Clause, which is really declaratory to a large extent and not retrospective, we shall inflict a great injustice. On that ground I ask the House to adopt it.

Sir THOMAS INSKIP

We are so accustomed to the versatility and ingenuity of the hon. Gentleman that we are not surprised to find how he has treated this question, and if I may I would congratulate the Government on having a Financial Secretary who can not only fulfil the duties of his own office, but other offices as well. The hon. Gentleman has said quite accurately that this is a difficult question if we are to dive into the repealed sections of the Income Tax Acts and the meaning of phrases familiar to persons who have to deal with Income Tax such as "final and conclusive." I wish that we could get our minds fixed on the essential question, and that is whether retrospective legislation is justified or can be justified upon the grounds which the hon. Gentleman has suggested as justifying this retrospective legislation. I think I am right in saying that his defence was based on two grounds. The first was that if the clause was not introduced in the Finance Bill, or a clause to the effect of the Resolution, inequality will be produced amongst taxpayers who ought to be equal. The second is that the cost will be considerable. The second defence moves me not at all. Retrospective legislation is justified or not according to the merits as affecting the individual citizen or taxpayer who is affected by the legislation, and except in a very clear case such as was involved in the War Charges (Validity) Bill I think the cost is not a matter that ought to affect this House. When you are dealing with hundreds of millions it may be that the House is left with no alternative, but when it is dealing with £3,000,000 different considerations arise.

The second defence, or the first in the order in which the hon. Gentleman dealt with it, was that of inequality. I think there was a little hiatus between the first and the second parts of his argument. I understood the first part of his argument to be this, that the case of Macdonald v. Shand in the House of Lords which decided that the addition by way of bonus to the salary of the subject was a perquisite would not apply to the War bonus dealt with in this Resolution, and therefore none of the persons in the Civil Service who are complaining of the retrospective legislation can rely on that decision. If that be right, I do not understand the object of this Resolution. Either these additions to the salaries of the civil servants are perquisites coming within the decision of the House of Lords applying to the repealed Rule 4 of Schedule E, or they are not perquisites which Macdonald v. Shand touch at all. The hon. Gentleman tells us that the war bonus to meet the cost of living is altogether on a different footing from the war bonus depending upon the revenue or profits of a company. He goes on to tell us that really very large issues are involved, and that a very large sum—as much as £3,000,000—will be involved in the finances of the forthcoming year. Although I have the greatest respect for the legal knowledge and advice which the hon. Gentleman is able to tender, I really think the Government must make up their minds upon which leg they are going to stand. Is Macdonald v. Shand a decision which really has anything to do with the Civil Service interest in this question or not? If it does touch their case, it is perfectly plain that, in so far as they are taxpayers as to whom assessments are not final and conclusive, they are entitled to certain relief which, having regard to their position in life, may be really a valuable sum to them. If they are entitled to the benefits of this decision and intend to reap the fruits of it, according to all the principles which with lip service at any rate we hold dear in this House, they are entitled to take advantage of that judgment, and we ought not to deprive them of it merely because it is to cost us a small sum. I do not understand why we should deprive them of something to which they are entitled because, owing perhaps to their diligence or perhaps to accident, they will be more fortunate than other persons. The way to produce equality is not to bring everybody down to the level where all will be exposed to the full rigour of the blasts of the Income Tax Commissioners. The real way to produce equality in relation to the Income Tax is, if necessary, to relieve certain classes and re-open the assessments which have been made upon them. If you want to reduce inequality which inadvertently has been made and which has exposed them to a liability that did not exist according to the House of Lords decision, assuming that it applies, you do not want retrospective legislation. I cannot accept for a moment that we are entitled in this House to pass retrospective legislation merely in order to reduce everybody to the same level of equality and to squeeze taxes out of them when they are liable to pay only because the Income Tax authorities desire to see them subjected to a liability which it was hoped they already were exposed to, but in fact were not.

The question as to whether Macdonald v. Shand applies is purely a legal question. It is not one I feel very competent to discuss, because it was only this evening, half an hour ago, that I began to look at this question and what it involves. Wherever I see a question of Income Tax I run away from it, because it involves one in such complications; but having looked it up, I do not quite agree that Macdonald v. Shand does not apply. Lord Birkenhead, who was dealing with the case, said that Rule 4, Schedule E, was intended to deal with the case where profits varied from year to year. Rule 1, Schedule E, deals with the tax taken from a fixed income. When you come to Rule 4, you are dealing with conditions which vary from year to year, and in the interests of the taxpayer the Legislature said they might be assessed at the three years' average. If you offer that distinction it is quite easy to see that war pensions may vary exceedingly from year to year, and ought to be dealt with under Rule 4 on a three years' average and not upon the receipts of that particular year. At any rate, that was the intention of the Legislature, and I venture to think that both from the argument of the Lord Advocate, who argued the case on behalf of the appellants, and the speeches of Lords Birkenhead and Finlay, it will be seen that there is a very good case indeed for arguing that the case of these persons is affected by the decision in Macdonald v. Shand. If that be the case—and I appeal to hon. Members in all parts of the House without any party feeling, because really this is not a party question—can any hon. Member taking hold of an individual case say "It is quite true you have a good case according to law, but it is necessary to change that law in order to get a little more out of the taxpayers, who are comparatively poor men." They were told, "You must pay something which you were not liable up to this time to pay in respect of the past two years' income." The Financial Secretary to the Treasury says Smith ought to pay in order that he may be on an equality with Brown, who unfortunately has been subjected to a tax which the law did not really impose upon him. I think it is a wrong principle. Or we say to Smith, "You must pay, because besides yourself there are 250,000 other persons who have to pay, which involves the country in a loss of one, two or three million pounds." I do not think that will appeal to Smith very much, and I do not think it will appeal to this House. It is a rather unfortunate disposition of this House, and it is a tendency to which I am afraid officials, and people connected with officials, are too easily disposed, to think we should correct by legislation the errors and slips of the past. We ought really to be on our guard against this increasing tendency. We have had it in the recent legislation, and in the War Charges (Validity) Bill. Every single case in which it can be brought against any party or any section of the House that retrospective legislation has been involved, makes the case stronger to-night against taking a single further step in that direction. We must make it plain sooner or later that this House is not prepared to cure mistakes in legislation retrospectively. We do not want to spare anybody, but we will, once and for all, now that we have got out of the atmosphere of the War, I hope beyond the the period of the war elements, get back to sound lines. If this Clause is necessary in the Finance Bill at all, let us say, at any rate that people who are protected by the law of 1921–1922 shall be entitled to the protection which it gives, and shall not be subjected to the risk of legislation by some future Parliament. What makes the case a little worse is that these are small men. I would rather see the Super-tax increased by a shilling or two shillings than that retrospective legislation should be imposed on the small men who can ill afford to bear this loss. The men who are affected are just the people who are touched by a difference of £3, £4 or £5 a year. They are men, not of £700 a year, but of £300 or £400 a year, with children to bring up. Feeling as I do upon this general principle of retrospective legislation, my objection to this particular Resolution is reinforced by the unpleasant feeling that we are taking action against the small man, in whose defence I think any Member might desire to be eloquent and persistent.

1.0 A.M.

Mr. PRINGLE

I think Members in all parts of the House will agree that it is extremely unfortunate that we should be discussing such a difficult and important subject at this unseemly hour of the morning. The speeches, both of the Financial Secretary and of the hon. and learned Gentleman who has just sat down, will, I think, have convinced everybody that this is a subject of some perplexity. Many hon. Members will agree with me that, in dealing with this subject, the exposition of the Financial Secretary was not quite up to his usual standard, and his failure to reach that standard naturally raises suspicion in our minds as to the soundness of his case; and when the hon. and learned Gentleman opposite went on to argue the case, there must be general agreement that it would be very unfortunate if the Government sought to adhere to the course which is set out in this Resolution without further consideration. In the first place, the Financial Secretary did not seem to be at all clear as to whether the decision in Macdonald v. Shand applied here at all. He argued, in the first place, that it did apply, but he did not seem to me to argue with conviction, and I think most hon. members who listened to the hon. and learned Member for Central Bristol (Sir T. Inskip) will be inclined to agree with me that the decision in Macdonald v. Shand, though dealing with a different set of subjects, covers the case of these civil servants who receive part of their income in war bonus which varies in accordance with the cost of living.

As I understand that decision, it is perfectly generally established both by the judgments of Lord Finlay and of Lord Birkenhead that it covered the case of those whose circumstances we are discussing to-night. But having argued that the case of Macdonald v. Shand did not apply, the Financial Secretary then went on to argue on the basis that it did apply, and he sought to convince the House that here was a case where retrospective legislation was justified. On what grounds? It was on the ground that, if this Amendment were adopted, we would be introducing a new inequality—that if one anomaly was renewed nevertheless a greater inequality would be introduced. I confess I did my best to follow the Financial Secretary to ascertain what exactly this inequality was, but he did not make it clear to my mind, and a similar impression, I think, was left on the minds of many hon. members. It may be the fault of our intelligence at this hour of the morning, but in these circumstances I suggest that it would be better for the Government to reconsider the matter and give the House an opportunity on another occasion, on the Committee stage of the Bill, to deal with this matter.

There was the further question as to the people who were affected by it. I confess that I did not feel sympathy with many of the people who were affected by the War Charges (Validity) Bill. They were people who had done very well out of the War, and therefore could not be said to have lost anything at ail. But the people who are affected by this retrospective provision, as the hon. and learned Member for Central Bristol said, are small men; they are not rich men, they are not people who can be accused of exploiting the community. It is, therefore, with some surprise that we find a Labour Government introducing retrospective provisions to apply to people in that position. The Chancellor of the Exchequer boasted, when introducing his Budget, that he was conferring benefit upon the small professional class of men by certain remissions such as the Inhabited House Duty, and most people argued that this class was deserving of consideration. Acting on that, one would have expected a Labour Government, if it was going to legislate retrospectively, that they would not have acted in this way towards people who were in the position of the smaller professional men, and who would be naturally entitled to their consideration. A point has been made as to the cost. The sum at stake is said to be £3,000,000—a considerable sum—almost the amount of the surplus which the Chancellor of the Exchequer has left over after his remissions. One can understand, therefore, that he is reluctant to part with such a large slice of that comparatively small sum. Nevertheless, I think the House will not be satisfied with the reply simply that because it costs three millions we must agree to these retrospective provisions. The general feeling will be that the hon. and learned Gentleman for Central Bristol was right; that in a matter of this kind, affecting over 200,000 men of small means, a matter of £3,000,000 should not stand in the way of an act of justice in order to preserve what rights the Government should be prepared to make even in this concession. In view of these considerations and the difficulty of the question, and the large interests involved, I hope the Government will indicate that they are prepared to reconsider the matter, and possibly take another line, when the question comes before the Committee or the Committee stage of the Finance Bill.

Mr. GRAHAM

If I may just for one minute intervene by the leave of the House, I would say at once that I very much regret that this question has been reached at this hour. I quite recognise that there are important considerations that other hon. Members would like to discuss. Let me say, just in a sentence, that we are advised that the claims regarding the civil servants is not sustainable in law. When the Clause is actually in the Finance Bill hon. Members can discuss it, and probably they would wish to have the opportunity and benefit of a statement from one of the Law Officers of the Crown. I would appeal to the House to let us have these Resolutions to-night, because, obviously, if we do not get them we are in a very difficult position. We have only until to-morrow night, and if hon. Members will agree to them I will undertake to look into this very carefully before the Finance Bill is introduced. A very full statement will be made on the Second Reading, and on the later stages there will be ample opportunity for hon. Members to move any Amendments they care to propose.

Sir T. INSKIP

When the hon. Member says that Macdonald v. Shand does not apply, is that the advice for the Law Officers; and, if so, are they running any very serious risk in not taking this Resolution?

Mr. GRAHAM

Perhaps my hon. and learned Friend will not press me on that point, because I would like to make a further investigation. If the House will give us the Resolution, I do assure hon. Members that there will be ample opportunity later for a full discussion and, of course, a vote. They will not be prejudiced in any way.

Mr. KEENS

There is considerable difficulty, because this is felt to be a serious matter. It was arranged that it should be pressed, and I am not at all sure that the olive branch of the Government should not have been in a much more definite form than it is.

The CHANCELLOR of the DUCHY of LANCASTER (Colonel Wedgwood)

The Government will promise to the House that if the Resolution is given now, they will, before the Committee Stage of the Finance Bill, go into the whole of this question with the Law Officers and see how far the case that the hon. Gentleman has made can be met. I appeal to him to meet the Government so far. If we give a vote now, we shall not have the benefit of the Law Officers who are not here.

HON. MEMBERS

Why are they not here?

Colonel WEDGWOOD

Hon. Members understand that they cannot always be here.

Mr. KEENS

I beg to ask leave to withdraw my Amendment.

HON. MEMBERS

No.

Question put, "That the words proposed to be left out stand part of the Resolution."

The House divided: Ayes, 160; Noes, 90.

Division No. 72.]	AYES.	[1.12 a.m.
Ackroyd, T. R.	Finney, V. H.	Keens, T.
Acland, Rt. Hon. Francis Dyke	Foot, Isaac	Kirkwood, D.
Adamson, Rt. Hon. William	Gavan-Duffy, Thomas	Lansbury, George
Adamson, W. M. (Staff., Cannock)	George, Major G. L. (Pembroke)	Lawrence, Susan (East Ham, North)
Alexander, A. V. (Sheffield, Hillsbro')	Gillett, George M.	Leach, W.
Alstead, R.	Gorman, William	Lindley, F. W.
Ayles, W. H.	Gosling, Harry	Loverseed, J. F.
Banton, G.	Gould, Frederick (Somerset, Frome)	Lunn, William
Batey, Joseph	Graham, D. M. (Lanark, Hamilton)	McEntee, V. L.
Benn, Captain Wedgwood (Leith)	Graham, W. (Edinburgh, Central)	Maden, H.
Berkeley, Captain Reginald	Greenwood, A. (Nelson and Colne)	Mansel, Sir Courtenay
Black, J. W.	Grenfell, D. R. (Glamorgan)	Marley, James
Broad, F. A.	Groves, T.	Martin, F. (Aberd'n & Kinc'dine, E.)
Brown, A. E. (Warwick, Rugby)	Grundy, T. W.	Martin, W. H. (Dumbarton)
Brown, James (Ayr and Bute)	Guest, Dr. L. Haden (Southwark, N.)	Meyler, Lieut. Colonel H. M.
Brunner, Sir J.	Hall, G. H. (Merthyr Tydvil)	Mond, H.
Buchanan, G.	Hamilton, Sir R. (Orkney & Shetland)	Morrison, Herbert (Hackney, South)
Buckie, J.	Hardie, George D.	Morse, W. E.
Charleton, H. C.	Harris, Percy A.	Muir, John W.
Church, Major A. G.	Hartshorn, Rt. Hon. Vernon	Murray, Robert
Climie, R.	Harvey, T. E. (Dewsbury)	Nixon, H.
Cluse, W. S.	Haycock, A. W.	O'Grady, Captain James
Collins, Sir Godfrey (Greenock)	Hayday, Arthur	Oliver, P. M. (Manchester, Blackley)
Collins, Patrick (Walsall)	Henderson, A. (Cardiff, South)	Owen, Major G.
Compton, Joseph	Henderson, T. (Glasgow)	Paling, W.
Comyns-Carr, A. S.	Henderson, W. W. (Middlesex, Enfld.)	Parkinson, John Allen (Wigan)
Cowan, D. M. (Scottish Universities)	Hindle, F.	Pethick-Lawrence, F. W.
Crittall, V. G.	Hirst, G. H.	Phillipps, Vivian
Darbishire, C. W.	Hobhouse, A. L.	Potts, John S.
Davies, Evan (Ebbw Vale)	Hodge, Lieut.-Col. J. P. (Preston)	Purcell, A. A.
Davies, Rhys John (Westhoughton)	Hoffman, P. C.	Raffan, P. W.
Davison, J. E. (Smethwick)	Howard, Hon. G. (Bedford, Luton)	Ramage, Captain Cecil Beresford
Dickie, Captain J. P.	Jackson, R. F. (Ipswich)	Rea, W. Russell
Dickson, T.	Jenkins, W. (Glamorgan, Neath)	Richards, R.
Dukes, C.	John, William (Rhondda, West)	Robertson, J. (Lanark, Bothwell)
Edwards, C. (Monmouth, Bedwellty)	Johnstone, Harcourt (Willesden, East)	Royce, William Stapleton
Edwards, G. (Norfolk, Southern)	Jones, Morgan (Caerphilly)	Royle, C.
Egan, W. H.	Jones, T. I. Mardy (Pontypridd)	Samuel, H. Walter (Swansea, West)
Falconer, J.	Jowett, Rt. Hon. F. W. (Bradford, E.)	Scrymgeour, E.
Scurr, John	Sullivan, J.	Welsh, J. C.
Seely, H. M. (Norfolk, Eastern)	Sunlight, J.	Westwood, J.
Sexton, James	Sutton, J. E.	White, H. G. (Birkenhead, E.)
Sherwood, George Henry	Thorne, G. R. (Wolverhampton, E.)	Williams, A. (York, W. R., Sowerby)
Short, Alfred (Wednesbury)	Thornton, Maxwell R.	Williams, David (Swansea, E.)
Simon, Rt. Hon. Sir John	Tinker, John Joseph	Williams, Dr. J. H. (Llanelly)
Sitch, Charles H.	Tout, W. J.	Williams, Lt.-Col. T. S. B. (Kennington)
Smith, Ben (Bermondsey, Rotherhithe)	Trevelyan, Rt. Hon. C. P.	Willison, H.
Smith, T. (Pontefract)	Varley, Frank B.	Wilson, R. J. (Jarrow)
Smith, W. R. (Norwich)	Wallhead, Richard C.	Windsor, Walter
Spears, Brig.-Gen. E. L.	Ward, G. (Leicester, Bosworth)	Wright, W.
Spencer, H. H. (Bradford, S.)	Warne, G. H.
Spoor, B. G.	Watson, W. M. (Dunfermline)	TELLERS FOR THE AYES.—
Stephen, Campbell	Watts-Morgan, Lt.-Col. D. (Rhondda)	Mr. Frederick Hall and Mr.
Stewart, J. (St. Rollox)	Webb, Rt. Hon. Sidney	Kennedy.
Stranger, Innes Harold	Wedgwood, Col. Rt. Hon. Josiah C.
NOES.
Agg-Gardner, Rt. Hon. Sir James T.	Forestier-Walker, L.	Remer, J. R.
Apsley, Lord	Fremantle, Lieut.-Colonel Francis E.	Richardson, Lt.-Col. Sir P. (Chertsey)
Aske, Sir Robert William	Gibbs, Col. Rt. Hon. George Abraham	Roundell, Colonel R. F.
Astor, Maj. Hn. John J. (Kent, Dover)	Greene, W. P. Crawford	Russell, Alexander West (Tynemouth)
Balfour, George (Hampstead)	Hacking, Captain Douglas H.	Samuel, A. M. (Surrey, Farnham)
Banks, Reginald Mitchell	Hannon, Patrick Joseph Henry	Samuel, Samuel (W'dsworth, Putney)
Barnston, Major Sir Harry	Harland, A.	Sandeman, A. Stewart
Barrie, Sir Charles Coupar (Banff)	Hartington, Marquess of	Savery, S. S.
Becker, Harry	Harvey, C. M. B. (Aberd'n & Kincardne)	Shepperson, E. W.
Blades, Sir George Rowland	Henn, Sir Sydney H.	Smith-Carington, Neville W.
Blundell, F. N.	Hennessy, Major J. R. G.	Somerville, Daniel (Barrow-in-Furness)
Bonwick, A.	Herbert, Capt. Sidney (Scarborough)	Spero, Dr. G. E.
Bowyer, Capt. G. E. W.	Hope, Rt. Hon. J. F. (Sheffield, C.)	Stanley, Lord
Burman, J. B.	Horlick, Lieut.-Colonel J. N.	Steel, Samuel Strang
Butler, Sir Geoffrey	Howard, Hon. D. (Cumberland, North)	Stuart, Hon. J. (Moray and Nairn)
Cassels, J. D.	Howard-Bury, Lieut.-Col. C. K.	Sturrock, J. Leng
Chamberlain, Rt. Hon. N. (Ladywood)	Iliffe, Sir Edward M.	Thompson, Luke (Sunderland)
Clayton, G. C.	Kay, Sir R. Newbald	Thomson, Sir W. Mitchell-(Croydon, S.)
Cockerill, Brigadier-General G. K.	Kindersley, Major G. M.	Titchfield, Major the Marquess of
Colfox, Major Wm. Phillips	King, Captain Henry Douglas	Vaughan-Morgan, Col. K. P.
Cope, Major William	Lumley, L. R.	Warrender, Sir Victor
Courthope, Lieut.-Col. George L.	Lyle, Sir Leonard	Watson, Sir F. (Pudsey and Otley)
Curzon, Captain Viscount	McLean, Major A.	Wells, S. R.
Dalkeith, Earl of	Moore-Brabazon, Lieut.-Col. J. T. C.	Wheler, Lieut.-Col. Granville C. H.
Davies, Maj. Geo. F. (Somerset, Yeovil)	Nicholson, O. (Westminster)	Wilson, Sir Charles H. (Leeds, Central)
Davies, Sir Thomas (Cirencester)	Pennefather, Sir John	Wise, Sir Fredric
Dawson, Sir Philip	Penny, Frederick George	Yerburgh, Major Robert D. T.
Duckworth, John	Percy, Lord Eustace (Hastings)
Dudgeon, Major C. R.	Perkins, Colonel E. K.	TELLERS FOR THE NOES.—
Edmondson, Major A. J.	Raine, W.	Sir Thomas Inskip and Mr.
England, Colonel A.	Rees, Sir Beddoe	Galbraith.
Eyres-Monsell, Com. Rt. Hon. B. M.

Resolution agreed to.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. HOPE

I doubt very much if any adequate explanation has been given of this Resolution. I do not remember any explanation in the Chancellor's original speech, and I want to ask the Financial Secretary to the Treasury to give some explanation as to whether there is any change in the law and what is the need of the change. We have just passed a Resolution saying that all the resolutions relating to Income Tax must be the same as last year, and I presume, therefore, that this Resolution must be different. Does it make any change in the law? The position is somewhat obscure.

Mr. A. M. SAMUEL

I suppose this relates to Sub-section (5) of Section 27 of the Finance Act, 1920. If so, it is a clumsy way of getting over the difficulty of interpreting that Sub-section. I understand that when United Kingdom Companies trade with the Dominions and Income Tax is payable by the United Kingdom Companies upon their profits, if a Dominion charges Income Tax the amount of such Income Tax is allowed as relief by the British Treasury to the extent of half the amount of the British Income Tax. When the Act of 1920 was passed, the object was to save British Companies, having their profits twice surcharged, and that the ordinary shareholders should have the relief. If I am right, here again we have something to put right. By the decision of the Court of Appeal in the case of Sheldred versus South African Breweries it was decided that by some ambiguity where there were preference and ordinary shareholders the relief goes not only to ordinary, but to preference shareholders. That was against the intention of the Act, and the result was that in many cases where preference shareholders have a fixed rate of interest they will pay a less late of tax to the Treasury than they ought. I do not see why the Treasury does not take a straightforward line and introduce a new Clause in the Finance Bill instead of sliding this thing through. The new Clause should exempt preference shareholders with a fixed preferential dividend from the operation of Sub-section (5) of Section 27 of the Act of 1920. I can see that there is the difficulty that the Treasury might have to refund money that it has never received. On the other hand, if the Treasury does not bring in a new Clause to exempt preference shareholders with fixed rates of dividend from the relief which Sheldrake versus South African Breweries has given, we shall fee in the peculiar position that in some cases they will be able to escape payment of the full Income Tax which they are entitled to pay and throw the balance of their burden on the ordinary shareholders.

Mr. GRAHAM

My hon. Friend will not expect me at this hour to deal with these very difficult points in income tax administration. I frankly confess I would require notice of a case of that kind, in order to be able to give a reply that is worth anything at all, I will, however, undertake to look into that. The Resolution simply deals with what is known as the Ritson case—with problems that arise when the rate of tax changes. If the House will forgive a fuller explanation, I think I shall be able on the Second Reading of the Finance Bill or later to explain this Clause quite clearly.

Mr. HOPE

Docs the Resolution make a charge, and whom does it charge?

Mr. GRAHAM

That I cannot reply to straight off. Our understanding was that this would not be raised to-night.

Mr. NEVILLE CHAMBERLAIN

Can the hon. Gentleman tell us exactly what was the understanding?

Colonel WEDGWOOD

Quite simply, it was this: When we consented to have a half-day for discussing these Resolutions instead of going on all night on the previous occasion, we understood from hon. Gentlemen opposite that we should be able to get through the work in the half-day.

Mr. CHAMBERLAIN

That is not in the least what the Financial Secretary said. He said there was an understanding that this particular Resolution should not be discussed this evening.

Mr. GRAHAM

No. I did not, I hope, convey that impression. We understood that Mr. Speaker was to call on certain Amendments to the Resolution. There was no Amendment on this Resolution and no Member gave me notice that he intended to raise it. I agree he was not bound to do so, but if he had given me notice I should, of course, have been prepared to reply.

Mr. G. BALFOUR

Are we to understand from the hon. Gentleman that he is unable to give an adequate explanation of this Resolution, and that we are asked to pass this Resolution in the absence of an adequate explanation? If so, it seems to me to be an absolute farce to submit these Resolutions to the House at all, and we might as well dispense with the present stage. Surely the best suggestion would be to move to adjourn the Debate?

Colonel WEDGWOOD

Perhaps I can give an explanation. This new Clause is to meet this particular difficulty. Hon. Members know that dividends are marked less Income Tax, which is appropriated for the period over which the company have been trading. When the Income Tax was reduced from 5s. to 4s. 6d. in the £ there were deductions from these dividends.

Mr. SAMUEL

On preference shares.

Colonel WEDGWOOD

All dividend warrants, not only preference shares. The deductions were at different rates, they were at any rate in my case. The point was this, that certain cute people observed that they might recover a larger sum by reason of the fact that Income Tax was deducted at or near 5s. though they were claiming for the year in which the tax was at the 4s. 6d. rate. They said "We want all these calculations made afresh on the basis of the extra fourpence or threepence a year." They were enabled to do so owing to some legal decision which gave them the power or was supposed to give them the power to do so, and it is to prevent this extraordinary complication that the proposal was made. As it is obviously an extremely complicated case would it not be better if we deferred debate at this unseemly hour until we have the Finance Bill before us and know every detail. I hope that will be the view of the House, because it is quite impossible to hasten this complicated subject; and at the same time it is absolutely essential that we should get the Resolution to-night.

Sir T. INSKIP

Over and over again to-night we heard from the Treasury Bench that it was essential to get these Resolutions to-night. There is something, just as essential as the passing of resolutions. They keep telling us that, but will any of them on the Treasury Bench get up, and explain it? I have much doubt whether the hon. Member knows what the Resolution means.

Mr. KIRKWOOD

He is not the only pebble on the beach.

Sir T. INSKIP

It is quite obvious that the hon. Gentleman who made that last interruption is in the same position as most of us and the House does not understand what this Resolution is. The hilarity which hon. Members behind the Government are displaying on this Resolution is a strange commentary on the fitness of Labour to govern. There is nothing so congenial to supporters of the Government, if we may judge from the last five months, as passing resolutions which they submit to us who do not share the gifts of providence that they have. This is really a matter of some seriousness and we are not merely going to be put off by the inability of hon. Members to do anything to clarify these matters. I can understand hon. Members on the Back Benches displaying that ignorance, but surely on the Front Bench, which is occupied by 14 Ministers, there should be one, at any rate, able to get up and give a more intelligible explanation than was given by the Chancellor of the Duchy. Whether we shall have a better explanation when we come to the Finance Bill, nobody can tell. It is desirable to place on record that we are asked to treat this stage and the next stage as a farce, because the House is asked to pass a Resolution which they cannot explain themselves.

Commander EYRES-MONSELL

The remark the Chancellor of the Duchy made in regard to what might be said to be a breach of faith cannot be allowed to pass. There was no breach of faith. We were given half a day extra to discuss the Budget Resolutions, but we did not say what time they would come to an end. It is largely due to the Amendments moved by the Liberal party that we are late. There is one other point, made by the Financial Secretary to the Treasury. He said something that might have given rise to the belief that we ought to have given notice of everything that is read.

Mr. KIRKWOOD

Let him put up his dolls and knock them down.

Commander EYRES-MONSELL

All these Resolutions must be put to the House, and every point must be raised. The real point of the matter is that the Government cannot give a reply. We can understand that, and we can sympathise to a certain extent, but I hope they will not try to get out of it by saying it is a breach of faith.

Mr. GRAHAM

I should be sorry if there were any misunderstanding on this matter. These Resolutions are in many cases complicated, and in order to economise time we moved the Resolutions, and there were selected Amendments, although a question can of course be raised on any Resolution. I did not anticipate there would be any difficulty, otherwise I should have taken care that the information was ready to be given to the House. I can, however, in a very few sentences, if the House will allow me to look at this document, tell hon. Members exactly what is meant. There is established a practice, as the House knows, of dealing with claims for repayment of Income Tax in respect of personal relief on the basis of the standard rate of tax in force for the year to which the claim relates, whether that rate is greater or less than the rate in force for the preceding year. I can illustrate the point by referring to a case which is perhaps typical of the kind of difficulty that was raised in the Ritson litigation. Take a taxpayer whose total income for the year 1922–23 was £1,000. He has received as part of that income dividend to the amount of £2 paid in respect of a period from September, 1921, to September, 1922, from which tax was rightly deducted at the rate of 5s. 6d. in lieu of 5s., the deduction amounting in all to 11s. instead of 10s. The Board of Inland Revenue acted upon the usual principle in the matter of this personal relief, and had only given the taxpayer relief of tax on the amount of his personal allowances at the standard rate in force, which say in this particular case was 5s. in respect of £275 taxable income. There is a good deal of other explanation of an intricate character, but, in short, it comes to this, that there is a doubt whether the repayment on that £275 should be at 5s. in the £ or whether it should take account of a small fraction of income taxed at a higher rate. The Board very definitely takes the view in favour of the old practice. It had a perfectly general application. It benefits the taxpayer a little when the rate of tax is increased and similarly prejudices the taxpayer when the rate is reduced This Resolution simply tries to regularise the position.

Lord EUSTACE PERCY

We are very much obliged for the intervention of the Financial Secretary and for his explanation, which is perfectly clear as far as it goes. At least, it is clear enough to show us that this is a piece of retrospective legislation of the very worst kind. We were first given a very frivolous explanation, which was no explanation at all, by the Chancellor of the Duchy. The House should again make a protest against retrospective legislation of this kind, especially as it is hidden away more or less in a Resolution where its retrospective character does not appear on the face of it. The attitude of the Financial Secretary towards retrospective legislation is the attitude which other Governments have adopted towards such legislation from the beginning of time—that it is bad, but in certain circumstances it may be convenient.

Mr. PRINGLE

I am interested to find the Noble Lord is now so much opposed to retrospective legislation. I have a recollection of an endeavour to pass a good deal last Session, and, unlike the present Government, the Noble Lord and his colleagues on that bench frequently never rose to reply at all. A great deal of complaint has come from that bench to-night as to the nature of the replies given by the present Government. The hon. and gallant Member who is Chief Whip of the Unionist party was loud in his complaint. The Financial Secretary at least does attempt to give a reply, but right hon. Gentlemen and hon. Members opposite, when they were in a difficulty, simply sat tight and held their tongues. I remember on one occasion, on a Financial Resolution, when an endeavour was made to get a ruling from the Government on a matter affecting Scotland, the hon. and learned Member who represented Scotland in this House got up to reply, and he was immediately closured by a colleague—the Minister for Agriculture—who realised that, if the Minister replied, the whole case would be given away by the Government. It seems to me that we are living under a better dispensation. The present Government are not supported by such a docile and servile majority as was the late Government. Hon. Gentlemen opposite, 12 months ago, supported the late Government, no matter whether they gave an explanation or not, or whether they were capable of giving an explanation, and still more frequently when hon. Gentlemen behind them were incapable of understanding any explanation. Of course, under these circumstances, whenever the Government decided it was necessary to obtain the Closure the hon. Gentleman behind them, submissively, tamely, and without any question, were willing to accept the Closure. But this is a different situation. There is free debate in this present House. Unless hon. and right hon. Gentlemen on the Front Bench are willing to give reasonable consideration to argument advanced from various parts of the House, either discussion does not end or further opportunities are taken to ventilate the question. I do not pretend to understand the Resolution which is before the House. I was not one of those Members who interrupted the hon. and learned Member for Central Bristol (Sir T. Inskip). I was listening with great attention. I thought he understood it.

Sir T. INSKIP

indicated dissent.

Mr. BANKS

Advice for nothing!

Mr. PRINGLE

I am surprised to hear the hon. and learned Member for Swindon (Mr. Banks) talking about getting advice for nothing. When we come into the House we give it without money and without price. I have observed that when the hon. Member for Central Bristol has got a good point, and is sure of it, he makes the most of it, and he does it very well, as he did on the previous Resolution. There he had a point which he did understand, and I agree with him.

HON. MEMBERS

Did you vote?

Mr. PRINGLE

I did not vote against it.

Mr. SPEAKER

The hon. Member must come to the point.

Mr. PRINGLE

I am very sorry that these irrelevant interruptions have led me somewhat astray, and I have not been able to reach the subject of the Resolution. I was anxious to discover what exactly was retrospective in this particular Resolution. Undoubtedly, in point of form, it is of a retrospective character. As the Noble Lord pointed out, it purports to state that, in relation to the repayment of Income Tax, this Resolution will operate whether the year of assessment ends before or after the 30th day of April, 1924. While it is retrospective, we have had no clear statement, either from the hon. and learned Member for Central Bristol or a member of the Government, as to the exact nature of its retrospective effect. We cannot say whether it is going to be injurious to the taxpayer, or to what extent. The object of the Resolution, so far as I understand it, is to deal with an anomaly discovered in a recent judgment. An hon. Friend behind me asks me to describe the point. Like the hon. and learned Member for Central Bristol, I have not had an opportunity of perusing the judgment and considering it, and I cannot respond to the invitation. We know there is a somewhat retrospective effect, and as the Financial Secretary is perusing the document and making himself somewhat better acquainted with the principles at issue, he may be able to tell us whether it is retrospective and the amount of money which is involved.

We have always been interested, in relation to such efforts in retrospective legislation, to ascertain what the cost is going to be to the Exchequer. In the War Charges (Validity) Bill we know that it ran up to over £100,000,000, and it was a matter of grave concern to the Treasury that some retrospective legislation should it be passed. On the Resolution we have been discussing earlier to-night, the Financial Secretary has intimated that the cost, if the provision was not adopted, would be £3,000,000. What I wish to ask the Financial Secretary is, how much is involved in the present provision? Is it a matter of millions or only of hundreds of thousands, and what class of taxpayer will be affected by it? I know the hon. and learned Member for Central Bristol was gravely concerned about the smaller men affected by the last Resolution. I am sure the attitude of hon. Members on this side of the House, both above and below the Gangway, will be very much affected according to how this a provision affects a large sum of money, or whether it affects rich or poor tax-payers. These are two practical questions; they do not raise any legal subtleties at all. They do not introduce the complexities of Income Tax law and they deal with certain particular difficulties. Who are the classes of taxpayers affected, and what are the amounts of money involved? I hope the Financial Secretary will be able to give an answer.