HC Deb 24 April 1928 vol 216 cc871-2

I have now completed my account of the finance and scope of our rating reliefs, and my indication of the local government reforms which will follow in the autumn so far as it is possible to give them at present. I am anxious, however, that the Income Tax payer should not be without some encouragement in the present year. The resources at my disposal do not admit of any reduction in the standard rate. Therefore, I looked to the statutory allowances which affect all sections of the Income Tax payers, although their value is more appreciated by the poorer classes of Income Tax payers. The burden of bringing up a family of young children weighs very heavily upon the smaller class of Income Tax payer, and is not sufficiently discounted by our present legislation. The notable decline in the birth-rate since the War is a convincing witness of the burden upon parents who have young children depending on them. The children's allowance is now £36 for the first child, and £27 for any other. I propose that they shall now be raised to £60 and to £50 respectively. Further, it has always seemed somewhat hard that these allowances are not payable—I think my hon. and gallant Friend the Member for Ripon (Major Hills) made this point last year—in the first year of a child's life. The expenses of maternity are a serious problem for all small Income Tax payers. So I propose that, in addition to the increase which I have mentioned, we shall make the allowances applicable in the year of the infant's birth. These remissions affect 650,000 households, and, counting spouses, they affect more than 1,000,000 adults. They give a far greater relief to the smaller Income Tax payer who is married and has children than would accrue from large reductions in the standard rate. The wisdom of the ancient Romans and indeed of Julius Cæsar himself, in whom the hon. Member for Silvertown (Mr. Jones) takes so great an interest, assigned to good citizens with three children special privileges in what was called—here I am going to do what I seldom do—quote Latin—jus trium liberorum. This increasing of the children's allowances is another application of our general policy of helping the producer.

I will give a few examples of the effect of these remissions to what everybody will agree is a most deserving class, the small Income Tax payers. I take the Income Tax payer with earned income who is married and has three children. A man with £400 per annum will be freed entirely from tax. A man with £500 per annum will have his tax more than halved, and will get a reduction equivalent to 2s. 9d. reduction in the standard rate. A man with £600 per annum will receive relief equivalent to 1s. 6d. reduction in the standard rate. A man of £700 per annum will receive a reduction equivalent to 1s. 5d. reduction in the standard rate. A man of £800 per annum will receive a reduction equivalent to 1s. 2d. in the standard rate; and even the married man of £1,000 a year with three children will benefit more by this provision than by 8d. reduction in the standard rate. After £1,000 a year the advantage diminishes as the tax scale rises out of all proportion to these basic allowances. Nevertheless, under the sound principle of our Income Tax law all taxpayers with children, the richest as well as the poorest, will share in this benefit. The cost of bringing remissions so substantial to such a great number of people is, I think, surprisingly moderate. It is £2,100,000 in the present year and £4,500,000 in a full year.