§ Every weekly wage-earner whose employer has prepared and delivered to the assessor a return containing the payments made to that wage-earner shall be entitled to receive a copy of the return so prepared and delivered upon application to the employer, and the provisions of the Income Tax Acts with respect to the failure to deliver lists, declarations, and statements shall apply where the employer fails to accede to such application.—[Mr. Spencer.]
§ Brought up, and read the First time.
§ Mr. SPENCERI beg to move, "That the Clause be read a Second time."
The Chancellor of the Exchequer cannot fortify himself in refusing this Clause by saying that any finance is involved in it. As the Clause is drawn, it will not mean one single farthing of loss or gain to the revenue. The object is to invest the workman with a certain right, and I fail to see on what ground he can 1241 be denied that right. I do not think that any other section of Income Tax payers would tolerate for one moment having their Income Tax form filled up by some other party, and having no right of oversight of that form when it has been filled up. That applies to the manual worker wage earner at certain periods of the year. He may be called upon to give particulars as to his wife and children, but at other periods of the year when the quarterly return is sent from the employers to the Inland Revenue he is not asked what wages have been paid to him. A return is sent in and he receives a form demanding Income Tax if he has attained the Income Tax standard. If he has earned £135 a year as a single man he is called upon to pay Income Tax if in any quarter he has earned over one-fourth of that amount. He has no opportunity of correcting any errors, and it is because errors do arise that I am asking that the workman should be given the right to demand from the employer or the Inland Revenue a copy of the wages form sent in.
I have come across at least two cases where errors have been made. On one occasion I had to go to an office to inquire into the wages of a workman and the return which had been sent in, and I was informed that a return had been sent in which was purely guesswork, and that that was done to penalise the workman because he had failed to send in a weekly return of his own wages. That applies where a man is a contractor and he has certain men working under him. At the week-end he is supposed to send in a return of the wages paid out to the men working under him and of his own wage, and if he fails to send in that return, in some instances a certain amount is put down, whether right or wrong, and he is penalised in that way. Where you have a system of returns of that character and you have a contractor with certain men working under him and he sends in a return, he may put down what he likes. I do not say that he would deliberately do wrong, but there is room for error. He puts down the wages of the men working for him and he puts down his own wage in the returns to the colliery office, and the colliery office sends the return to the Inland Revenue. The workman has no knowledge what has been sent in, and he has no right to demand a copy of the 1242 wages list sent to the Inland Revenue. Hon. Gentlemen opposite would not pay Income Tax on these lines. They would insist on knowing the amount of wages sent in and on being able, if they desired, to check the amount. The other case of which I know is that of a return of wages sent in by a colliery company which included, in the amount of wages, 11s. which had been paid each week for powder for blasting purposes. If hon. Gentlemen in carrying on a legitimate trade spent an amount of money in carrying it on that amount would not come into their income, and they would not allow the Inland Revenue to put it into their income. In this instance the man had no check on the Inland Revenue people, and it was only through the courtesy of the colliery company that I was able to ascertain that this amount had been included in the return of wages. I ask the Chancellor of the Exchequer to accept this modest Amendment which would simply invest a workman with the right to demand a return of his wages if he so desired.
§ Mr. MAXTONI beg to second the Motion.
In the early hours of the other morning in Committee when we addressed the right hon. Gentleman on this matter, to move him to give it his serious consideration between then and the Report stage, I gathered from his benevolent expression that he was prepared to make some concession on this point. I hope that I was not wrong. I do not see the same benevolent look now.
§ Mr. CHURCHILLI think that my concession took this form: When the matter was in Committee it seemed likely to be cut out from discussion, and I think I said that we would do what we could to see that it was discussed on Report.
§ Mr. MAXTONI am sorry that I exaggerated the extent of the benevolence of the Chancellor, but it is not too late, and I hope that he will be persuaded to give the matter his very kindest consideration. It seems nothing to the Exchequer but it would get rid of an immense amount of friction with manual workers in various industries. I imagine that in big factories and workshops where there is a large number of employés, and there is a proper counting 1243 house department, errors would very seldom creep in. But where you have a small employer of labour employing three or four people, whose bookkeeping is most haphazard, and in whose case the Income Tax Commissioners have the greatest difficulty in finding out what the employer's own income is, there may be errors. In these cases the Commissioners may have great doubts as to the accuracy of the return which the man makes with reference to his own income, and yet they accept unchallenged the return which he makes with reference to those employed by him. Seeing that this concession will cost nothing to the Revenue, but will give the workman the right to a check which at present every employer of labour enjoys I trust the Chancellor will accept the Amendment.
§ Mr. CHURCHILLIf there were any real hardship involved in the present administration of the law, at any rate it would not cost the Government any loss of revenue to set it right. The question therefore, to which I address myself is, whether there is any real hardship? I think it would be very objectionable for a man to have his Income Tax form made up and sent in by someone else, and to be simply assessed to pay without having any opportunity of knowing what had been said about his income or any opportunity of making a calculation or return for himself. When I first looked at the Amendment on the Paper I thought that that was the position of affairs. But let us see exactly what happens. Under the provisions of the Income Tax Acts, every employer is required to furnish returns of the salaries or wages paid to his employéey are over £150 a year. He sends in these returns. If at the same time he had to send a separate return to every individual in his employment, it would be a very great addition to the paper work and administrative labour thrown upon the employers, who by common consent are a very hard pressed community at the present time. The employers would have to send a duplicate form to each person in their employment.
§ Mr. SPENCEROnly on application.
§ Mr. CHURCHILLThe employer would have to be ready on application to send them. I am advised that if a workman wishes to know what return has 1244 been made of his wages, there is no difficulty, in the overwhelming number of cases in obtaining the information.
§ Mr. SPENCEROn three occasions on behalf of workmen I applied to the Inland Revenue for a copy and they refused to give it to me.
§ Mr. CHURCHILLI would like the hon. Member to give me instances, so that I may pursue them. I am assured that, quite apart from any application which the workman may make to his employer to know what has been said about his wages, when the Inland Revenue authorities send in their notice for the first quarter's payment, they set down on it the figures returned by the employer, as a general rule.
§ Mr. B. SMITHOnly the amount demanded.
§ Mr. CHURCHILLThe amount of wages a man has received and on which the assessment is based. If in any subsequent quarter the man wishes to know what the return is he would never be refused. Therefore, either from the employer in a reasonable way or from the Income Tax authorities, I am advised that the workmen can obtain information as to what return has been made by his employer. Quite apart from what the employer sends in, he makes his own return as to what his income is. The employer sends in the information and tells the Inland Revenue to whom they can apply, and then they apply and send in their assessment. But that does not prevent the workman from making out his own return, and if it is correctly made out he is in a perfectly secure and independent position in regard to it.
That is materially the law and how it works at the present time. It may be that there are cases where the employer has put a man down at a certain scale of wages, and the Inland Revenue have accepted the employers' word and the man has no knowledge of the matter and so forth, and I should like to have an instance of that kind brought to my notice. The last thing we wish to do is to have the grievances which are inseparable from the collection of taxes amplified by any want of fairness or propriety in the procedure. In discussing all these matters, it must be remembered how enormously we have reduced the taxation 1245 upon this class of taxpayers. We have reduced it by more than half since 1921—not we alone, but this Government and its predecessors—and we have made the latest and the largest contribution in that direction. Therefore, I trust we will not be asked to insert this Amendment in the Finance Bill, because if my hon. Friend can give me cases where the Inland Revenue have refused to give information when it has been reasonably asked for in the ordinary course, I will gladly and with great care pursue these instances to their proper conclusion and see exactly how matters stand, and if dissatisfaction still exists on the subject, it will be quite open to hon. Members to bring it up next year with the knowledge produced by that inquiry.
§ Sir P. HASTINGSI am sure the Chancellor is anxious that any grievance in this matter should be met. [HON. MEMBERS: "Speak up!"] I apologise to the House if I am not making myself heard. There does seem to be a grievance in this matter. I frankly confess I was not aware of it—and I fancy the Chancellor was not previously aware of it—until a number of cases were brought to my notice of this character. There is, of course, a limit to Income Tax above which a man who has a limited wage does not pay, and many of them do not know, until the conclusion of the period, whether they come within the limit or not. It is the duty of the man theoretically to send in his own return, and the return of the employer is theoretically, only a check on the return of the workman, but in point of fact a large proportion of workmen do not send the return, largely because they do not know until the end of the year whether they are liable for tax or not. Therefore in practice in most cases it is only the employer's return on which the Income Tax authorities can act. There are many cases in which discrepancies may arise. Cases frequently occur, I am told, in which a man is paid by the employer, but in turn he employs the assistance of boys and others and a proportion of the money received from the employer is paid out to someone else. The workman has no check upon this at all.
§ Mr. CHURCHILL indicated dissent.
1246§ Sir P. HASTINGSMy right hon. Friend will forgive me if I say that he has not, in fact, any check, because very often the workman simply receives from the employer a certain sum and has no record at all, and no idea that he is liable to tax but on the employer's showing at the end of the year he is liable to tax. I think it is not a very difficult matter to put right. In practice it is the fact that if a workman asks for an employer's return he does not get it, and it is right that he should not get it, in the full sense, but if my right hon. Friend were to give instructions that when the workman asks merely for that portion of the employer's return which affects himself, he should be entitled to it, I think all difficulty would be removed.
§ Mr. CHURCHILLWho is he to ask—the employer or the Inland Revenue?
§ Sir P. HASTINGSFirst the employer. If the employer says, "I have not got one; the only return is that sent in to the Inland Revenue,' then my right bon. Friend could give instructions, in those cases, that the Inland Revenue, instead of taking the point which they usually take, and rightly take—that there is no power in them to give the return of the employer to somebody else—are to say that the return, in so far as it affects the particular applicant, will be sent to him, the whole difficulty would be removed.
§ Mr. CHURCHILLI am not going to make another speech. [HON. MEMBERS: "Speak up!"] I was going to raise my voice when I came to the operative part. I understand that the rule at present in force is that if the workman wishes to ascertain from the inspector of taxes what the employer says about his income of the previous quarter, or what is now the half-year, he is given that information. Further, I am advised, that in sending in the first assessment in the year the return of the wages paid, as sent in by the employer, is stated, and the assessment is normally based upon that. I will see that these processes are effectively operated in the next 12 months.
§ Sir P. HASTINGSMay I say—[HON. MEMBERS: "Speak up!"] May I say, now the right hon. Gentleman has given that information, I think it practically goes the whole way, or a portion of the way to remove the difficulty, and I think 1247 we might now very well withdraw the Amendment.
§ Motion and Clause, by leave, withdrawn.