§ 57. Mr. JOHNSTONasked the Chancellor of the Exchequer if he can give any estimate of the costs incurred by the Treasury in clerical and other expenses in the Income Tax Departments, rendered necessary by the fact that the banks do not deduct income Tax when paying or crediting back accounts with accrued interest?
§ Mr. CHURCHILLI am unable to state what fraction of the cost of the Inland Revenue Department may be referable to the assessment and collection of Income Tax on the income to which the hon. Member refers. I would add, that I am advised that the change in the treatment of bank interest, which the hon. Member is advocating in his following questions, would not necessarily secure any economy in administration costs, inasmuch as on balance it would be likely to add to the work involved in claims to repayment of tax.
§ Mr. THURTLECould the right hon. Gentleman say whether this would result in a largely increased revenue or not?
§ Mr. CHURCHILLI am led to believe that it would not tend to any large increase in. revenue. If I were led to believe to the contrary, I should look at it with very great interest.
§ Mr. JOHNSTONArising out of the supplementary reply, is the right hon. Gentleman not aware that a Royal Com mission on the subject came to exactly opposite conclusions to those which he has just expressed?
§ Mr. CHURCHILLYes. I had the opportunity of perusing passages from the Report of the Royal Commission Ix fore I made my answer.
§ 58 and 59. Mr. JOHNSTONasked the Chancellor of the Exchequer (1) whether he is aware that the Royal Commission on Income Tax [Cmd. 615] reported that there was considerable evasion of Income Tax in regard to bank interest credited to deposit and other accounts; and what steps, if any, he proposes to take to ensure collection of such Income Tax at the source; (2) whether he is aware that on the Committee stage of the Finance Bill (No. 3), 1915, the Government with drew its proposal to authorise deduction of Income Tax by the banks upon interest paid on bank deposits, and announced that an agreed Clause in another form of words would be substituted; and, seeing that no such substituted Clause was pro posed, has he any intention of taking steps to ensure that this form of income shall no longer largely escape taxation?
§ Mr. CHURCHILLWith the hon. Member's permission, I will answer these questions together. I am aware of the circumstances to which he alludes, but, as I stated in reply to the hon. Member for Shoreditch (Mr. Thurtle) on the 11th March, the question of the collection of Income Tax at the source on bank interest credited to deposit and other accounts involves a number of important and difficult considerations. I do not share the hen. Member's view that there is a large loss of revenue under the existing procedure; I can assure him that the problem of the evasion of liability to income Tax receives constant attention in all its aspects.
§ Mr. JOHNSTONIs the right hon. Gentleman aware that officers from his own Department gave evidence before the Income Tax Commission to the effect that they estimated that about £100,000,000 of money had escaped taxation during a particular period?
§ Mr. CHURCHILLThe evidence and the Report of that Commission are continually considered in the Treasury, and we do our utmost to turn to the best advantage the information and advice which the Commission gave.
§ Mr. JOHNSTONBut is the right hon. Gentleman not aware that the Government, acting presumably upon the advice of its Treasury Department, actually brought in a Clause on the Finance Bill to bring about this reform, and that the 1375 late Chancellor of the Exchequer or his assistant declared in this House that an agreed form of words had been come to and would be introduced next day, and that such agreed form of words has never yet been put before this House?
§ Mr. CHURCHILLIt is in the light of those facts that I have given the answer which I have just read out, but, as I say, all questions relating to the more efficient collection of the revenue will always be approached by me in an unprejudiced and hopeful spirit.