§ For the purpose of enabling deductions from revenue receipts of expired capital outlay on inherently wasting assets to be allowed by the additional Commissioners claims in respect of those deductions shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits and gains of any trade, manufacture, adventure, and concern, and where such a deduction from the revenue receipts is made, and has been made, from the commencement of the actual employment of the inherently wasting assets in seeking profits, or during a period of not less than three years to the end of the usual financial year of the particular trade, manufacture, adventure, or concern, last prior to the year of assessment, and provided such deduction is so made as to prevent the same being available as profits, the additional Commissioners in assessing those profits and gains shall make such allowances in respect of those claims as they think just and reasonable.
§ For the purpose of this section the term "inherently wasting assets" means assets which necessarily waste in the process of seeking profits. Provided always that such wasting assets are not the value of transferred rights to future profits or increase which would have been chargeable with Income Tax if no transfer of such rights had been made.—[Mr. Basil Peto.]
§ Brought up, and read the First time.
§ Mr. BASIL PETOI beg to move, "That the Clause be read a Second time."
This is the second of the two proposed new Clauses standing in my name on the Paper. In view of what has just been said, I do not propose to move the first —(Table water duties of excise)—but the Clause which I am now moving deals with a matter of vastly greater importance. It needs, however, but a very short explanation to-night, in view of the fact that it has been before the House, in one form or another, in connection with almost every Finance Bill for the last 15 years, and every Chancellor of the Exchequer during that period, or his representative, has given sympathetic replies, and indeed, promises of consideration at the earliest possible moment. Therefore it is not necessary for me, particularly in view of the fact that I moved a Clause in these identical terms in 1923, which was moved again last year by my hon. and gallant Friend the Member for Lewisham (Lieut.-Colonel Pownall), to do more than refer the Chancellor of the Exchequer to the fact that in the OFFICIAL REPORT, volume 165, column 1294, and fol- 454 lowing columns, so far as in my humble capacity I was able to do it, I put the whole argument for relief from taxation of that part of the profits of an undertaking dealt with in this Amendment. An almost similar Clause, but somewhat more restricted, was moved in 1912 by Sir Ernest Pollock, now Master of the Rolls. All the points about companies registering abroad and the Chancellor losing revenue were fully dealt with on that occasion. All I have to do to-night is to deal with one aspect, which is, I think, a new point and one of urgent necessity under present circumstances. What are these wasting assets? Mine shafts, obsolescent machinery and things of that kind? They all belong to productive industry, and it is very important to see that we carry out what is stated in the original Income Tax Act of 1842 to be the basis of the tax—"Annual Profits or Gains accruing to any person from any Profession, Trade or Employment."
In view of the present situation and the unfavourable prospect for nearly all our industries, there are specially urgent reasons why the right hon. Gentleman should accept this Clause now, and net only promise, as all Chancellors have done in the past, to consider the matter. I want him to recognise the fact that the Royal Commission of Income Tax, which sat in 1919, and reported in 1920, found in favour of the principle enshrined in this Clause. If he cannot accept it, I want him, either to appoint a Parliamentary Committee, or to examine the subject in his own Department between now and the next Finance Bill, so that when he is able to give any further relief from income tax he should not give it like the relief granted this year of 6d. in the £ which, like the rain, "falls on the just and the unjust," but should make it bear directly on the great problem of unemployment, and give relief to productive industries from what is really an unfair method of assessment.
§ Mr. CHURCHILLIt is quite true, as my hon. Friend has stated, that three successive Chancellors of the Exchequer, in three successive years, have promised that faithful and sympathetic consideration shall be given to the serious case which he has made, and which he makes not only on his own behalf but in repre- 455 sentation from an important body of public opinion in this country. But none of these Chancellors of the Exchequer survived to carry out their promise. In the last four years there have been six Chancellors of the Exchequer who sat in the chair that I now occupy, and I am sure that the Committee will feel that anything of that kind ought now to come to an end, and that we ought to have a continuity. On that basis I can promise my hon. Friend that there shall be the most careful watching of the serious case which he has put forward with a view of seeing whether, if there were a possibility in any future years of giving a further relief of Income Tax, it could be applied in the way suggested.
§ Question, "That the Clause be read a Second time," put, and negatived.