§ Whereas under Section forty-two of the Finance Act, 1927, Surtax is due and payable as a deferred instalment of Income Tax, it shall be provided that where a person assessed to Surtax dies (or ceases to be liable to Surtax) during the year following the year of assessment, the amount of Surtax payable in respect of the year preceding his death or cessation from liability shall be restricted to the proportion of the year during which the person dying or ceasing to be liable was subject to taxation.—[Sir H. Buckingham.]
§ Brought up, and read the First time.
§ Sir HENRY BUCKINGHAM
I beg to move, "That the Clause be read a Second time."
This is the second time during the Debate on the Committee stage of the Finance Bill that we have had an opportunity of discussing the question of the Surtax. We had a Debate last week on an Amendment moved by the hon. Member for York (Sir J. Marriott), and, obviously, neither he, nor anybody else expected that the Chancellor of the Exchequer would accept the Amendment, because it would have completely upset the whole balance of the Budget. We had, however, a Debate on the matter, and to-day we have another opportunity. This new Clause would not upset in any sense the balance of the Budget. The result of the Clause would be that the 1233 Surtax payers would be put back into the position in which they have been up to the present. In other words, their executors would not pay the extra year's Surtax after their death. I admit the Chancellor would lose the £60,000,000 he will get if the Surtax Clauses are put into law, but it is quite possible for him, if he wishes to do so, to accept this Clause without upsetting the whole balance of the finance of the year. I do not intend to make a long speech this evening, in view of the business still in front of us, and because I believe there are a good many other hon. Members who wish to speak upon the matter who did not have the opportunity of doing so last week. Anyhow, I hope there are, and I hope they will speak, because the more this matter is ventilated the better for us all, and, I think I may say, the better for the Chancellor.
I made my protest last week against the imposition of this extra taxation upon a very small class of taxpayers. I believe that if the Chancellor had come to the Super-tax payers and said "I want £2,000,000 more to balance my Budget" the Super-tax payers would have been quite patriotic enough—they always have been—to pay. I have protested, and I protest again, not so much against the levy of £2,000,000 a year upon Super-tax payers as I protest, and most strongly, against the insidious and surreptitious manner in which this tax was jumbled up in the mazes of those extraordinary Income Tax Clauses last year. I protest, too, against the association which the Chancellor tries to establish between this impositon of taxation and his system of simplification. The two things are entirely different and entirely separate. I also protest against the Chancellor's statement that this extra tax upon Surtax payers is necessary to balance the loss which he said he will make upon the change in the assessments under Schedule E, because I believe that loss is entirely imaginary. If there be any loss at all, I challenge the Chancellor, or anyone else in the House, or the officials of the Treasury, to show that that loss can possibly be for more than one year, whereas this particular tax is a tax which the Chancellor has admitted means £60,000,000 spread over a generation, or, 1234 roughly, somewhere about £2,000,000 per annum.
I am not going to make a speech on this matter, but before formally moving this Clause I should like to ask the Chancellor whether he has had time to consider the appeal I made to him last week with regard to people who may have a considerable income but who die with very small capital. I need not repeat what I said, or recall to his mind the examples I mentioned last week, because be is quite well, aware of them, but I should like to know whether he has had time to consider this matter. There is an undoubted hardship in the case of a man with £5,000 per annum who leaves an estate of £5,000. The actual imposition of this extra Surtax means considerably more than double the Estate Duty—on a small estate. In conclusion, I would ask the Chancellor to answer this question.
§ Mr. CHURCHILL
The subject raised in this new Clause was fully debated during the passage of the Bill through its actual Committee stage, and the opinions of the Government were fully stated by myself and also by the Attorney General; and, therefore, when my hon. Friend repeats the appeal which he made on a previous occasion with his customary lucidity, backed by the knowledge which a lifetime's study of the Income Tax has given to him, and does it with all the ardour with which his championship of the Income Tax payer is invested, I can only deal in my reply with such new material as is needed to complete the answer I have already given. Let us look at the matter from two points of view. First, let us look at it from the point of view of procedure. The hon. Member used the word "surreptitious." He said we had surreptitiously imposed this additional tax upon the public under the camouflage—though that was not the word he used—of a simplification scheme. If there had been any surreptitiousness it has been fully-unmasked for more than a year past. As a matter of fact, there was none. At the outset, as soon as we got into Committee upon the Finance Bill last year, it was clearly stated that this involved an extra charge on the tax payer—there was no concealment of that fact—and that it was an offset against the remission which was necessary for the purposes of 1235 the simplification scheme in regard to Schedule E. On the last occasion, I read what I said, and I will now read what the Attorney-General said. He said:The distinction is that in the case of people who come within Schedule E they will pay less Income Tax and Surtax than they would if the alteration were not made. They are put back one year as the scale goes up. The net result will be about to balance the extra amount. Therefore if it were a matter of financial advantage there would be no profit in making the alteration. I say frankly it cannot be the object of this law to gain some advantage to the Revenue, because there is no advantage."—[OFFICIAL REPORT, 19th July, 1927; col. 361, Vol. 209.]I also said:I fully appreciate the fact that while in certain directions the simplification scheme meant a loss to the Exchequer, in this respect there was a gain to the revenue of an almost exactly similar amount."—[OFFICIAL REPORT, 19th July, 1927; col. 349, Vol. 209.]I am not saying this to justify the merits. All I am saying is that the fact that there was an additional charge, which we estimate at over £1,000,000 a year in the aggregate on the Super-tax payer, and that it was balanced by a similar remission, though to a somewhat different class of taxpayers, under Schedule E was clearly before the House last year.
§ Sir H. BUCKINGHAM
Will the right hon. Gentleman justify the statement that there will be a loss of £1,000,000 a year upon the adjustments under Schedule E?
§ Mr. CHURCHILL
I am for the moment dealing with the word "surreptitious" which my hon. Friend used. I say that all this was brought out most clearly and plainly in the Finance Bill last year. In those discussions we had the advantage of the assistance of the hon. Member who now fills the office of Deputy-Chairman of Committees, and who exposed the matter with the utmost candour, so that there was no manner of doubt exactly how the position stood. Therefore, I say, there has been nothing of a surreptitious nature. The exact, proper, correct procedure was followed throughout, and Parliament and the country have known, in so far as they are able to follow these complicated proposals, that there was to be an extra charge on the taxpayer.
1236 I leave the question of procedure and come to the merits of the change. Is it a fair step we have taken? I am bound to say that the more I have considered it the less I have felt that it is an unjust or inequitable thing to do. After all we are only applying to the Super-tax payer exactly the same measure as is applied to the Income Tax payer. No one pays Super-tax for any more years than he has had a super income. There is no question at all of taxing the same income twice over. For every year that there has been an income there is an Income Tax imposed. That in the law of the ordinary Income Tax payer. All we do in this Bill is to make the law for the Super-tax payer march on exactly the same road, step by step, as the law in regard to the Income Tax payer. My hon. Friend has drawn attention to the hard case of a man who makes a large income for one year, and that the last year of his life, and of the heavy burden which is then imposed upon his widow, the source of income having presumably stopped. An equally hard case, though on a smaller scale—and perhaps all the harder because it is on a smaller scale—arises in the case of a person with an income under £2,000 a year. If that man has succeeded in obtaining a substantial income in the last year of his life, though under the Super-tax limit, after he dies the Income Tax for that year, so far as he has not paid it, is collected from the widow. Therefore, there really is no difference between the two classes, except that the Super-tax affects people who are rather better off than the Income Tax paying class. It should also be remembered that this payment of Super-tax by the executors after death is deducted from the amount of the estate before death duties are charged upon it; although the scales are not similar. It is so.
§ Mr. CHURCHILL
Though I do not by any means say the one balances the other, it is pro tanto an offset. On the whole I must rest where I was before. First of all, there has been no improper procedure, no ambuscade has been sprung upon the taxpayer. Secondly, I claim that we have merely assimilated the prin- 1237 ciple of the Super-tax to that of the Income Tax, and that principle has always been accepted, and is accepted now, as right and proper in the case of the Income Tax. If we had not got relief through obtaining this £1,000,000 a year in the process of simplification, we should have carried through the simplification at a loss which the revenue cannot at present stand. My idea was that the simplification should pay for itself. My hon. Friend dealt with that matter and gave us assistance in preparing the whole of that great scheme of simplification, and I am sure he knows that of itself it is a good thing. But I could not carry that out at a loss to the Revenue, and I propose that it should pay for itself, as it will do.
§ Mr. CHURCHILL
Certainly, and if my hon. and gallant Friend had followed the extracts which I read on this occasion, and also the longer extract which I read on the occasion of the all-night sitting, he would see that it was clearly explained and further that it was amplified and filled in by the very well-informed speeches made by many of those who sit round him at the present time. I am not in a position to forgo this revenue. If I were not to impose this altered form of the Super-tax which was placed before Parliament and provisionally assented to by Parliament last year I should have to seek some additional source of direct taxation to balance the loss. I am sure the Committee will not press me to do that.
§ Sir JOHN MARRIOTT
We have this grain of cold comfort from the Chancellor of the Exchequer. We now know exactly where we are. We know that the right hon. Gentleman is not prepared to forgo any portion of the revenue which he foresees from this additional taxation. I do not remember that last year the Chancellor of the Exchequer used any such language at all. I do not remember that last year the Chancellor of the Exchequer spoke of additional or new taxation, or of balancing one change of method against the other. My impression is that he stated very clearly a year ago that this was a change, not of substance, but of form, and that is the 1238 first reason why some of us are insisting that this matter shall be clarified during the present discussion. I want in a very few words to explain what has happened since a week ago, and to support the hon. Member for Guildford (Sir H. Buckingham), who, I hope, means to press this new Clause to a Division. It was impossible for me to ask the Committee to divide a week ago when I moved the Amendment to which reference has been made for the reason that, had we divided on that Amendment, it would have meant that the whole scheme of the Budget would have been overthrown for the present year. I am a keen supporter of the Budget as a whole, and I regard it as one of the greatest Budgets that has been produced for a good many generations.
Since a week ago, I and other hon. Members have been overwhelmed by correspondence on this matter, and there has been a unanimous opinion expressed in that correspondence that it was understood that a year ago no taxation of this kind was intended. This year the Chancellor of the Exchequer has frankly admitted that he cannot afford to part with an additional revenue which he puts at £1,000,000 a year. I am sure the right hon. Gentleman will be the first to Admit that that is only a guess, and the total additional sum spread over 20 or 10 or 60 years depends on contingencies which neither he nor I can possibly foresee. I think the right hon. Gentleman will be ready to admit that his £1,000,000 is a guess. It may be a shrewd guess, but it cannot be more; than that. Even the "Times," which is usually exceedingly moderate in these matters, declared that it was difficult to excuse the surreptitious manner in which the Surtax provisions were introduced. The Chancellor of the Exchequer has quoted from a speech made last year by the Attorney-General, and I will venture to quote from another part of the remarks of the Attorney-General, who, speaking on the 30th of June, 1927, used these words:Under the Clause nobody will pay Surtax for more or less years than he has a Surtax income. Everyone will pay Surtax on exactly the number of years for which he enjoys an income which renders him liable to Surtax. Under Super-tax people paid the tax for a year less than they 1239 ought, for they paid it not in the year they first entered it, but the year after.Whose fault is that? Did the revenue not exact all the money they ought to have exacted from the Super-tax payer. I have been quoting from a speech by the Attorney-General from which the Chancellor of the Exchequer has quoted, and I thought that, as the right hon. Gentleman had quoted him, I was entitled to quote him as well. The Attorney-General continued:Now we are changing the system. The Surtax, which is only a deferred amount of Income Tax, is going to be levied in every case for exactly the number of years for which a person is liable to pay it—for exactly the period during which the person surtaxed enjoys an income which entitles him to the Surtax."—[OFFICIAL REPORT, 30th June, 1927; col. 751, Vol. 208.]That was the language used by the Attorney-General a year ago, and many of my correspondents are calling my attention to the language that was then used. One of them begs me to teach the Chancellor of the Exchequer—the last thing that I should attempt to do—that sly tricks do not pay. As a Conservative I am ashamed and disgusted that a so-called Conservative should have brought in what I can only describe as a slim piece of legislation.Another correspondent makes a reference which I am unable to interpret, and he says:Please do not let this bumptious voting man bluff you.Of course, this is merely the froth of the matter, but there is some stout stuff behind it. What is the substance of the points which we are attempting to make? They have been admirably put by the hon. Member for Guildford. There are really two points in this new Clause as I think the Committee will have observed. We are asked to declare thatwhere a person assessed to Surtax dies (or ceases to be liable to Surtax) during the year following the year of assessment, the amount of Surtax payable in respect of the year preceding his death or cessation from liability shall be restricted to the proportion of the year during which the person dying or ceasing to be liable was subject 10 taxation.The Committee will see that we are contemplating the case of a person liable to Surtax who dies, or the person who having been liable to Surtax ceases to be so liable. We say in regard to the first case that it is simply an additional 1240 Death Duty with this peculiarity, and this peculiar injustice and inequality, that it is a Death Duty which has no relation whatever to the size of the estate left by the deceased person. Whatever you may say of the hardship of the Death Duties as they are at present imposed, this at least can be said of them, that they do bear some relation to the size of the estate which has been left by the deceased person. That system may inflict a hardship upon certain persons, and nobody denies that in certain cases it does inflict a hardship; but it may be said that the Death Duties, as at present levied, have some relationship to the size of the estate. But this duty which you are now proposing to impose, not by the direct method of Death Duties but by a Surtax levied on an additional year, bears no relation whatever to the actual estate of the deceased person. It has already been pointed out that a man may die suddenly who has been enjoying a large income, and his estate may be made liable to duty out of all proportion to the capital sum which he leaves behind him at his death. I hope that the Chancellor of the Exchequer will give more consideration to that point than he appears to have done up to the present. I trust that between now and the Report stage, although he has met our new Clause with a stiff upper lip, he will be able to give some further consideration to it before the Finance Bill is finally passed into law.
Besides the case of death this new Clause deals with another case, where a man's income through retirement or some other cause suddenly drops let us say from £10,000 a year to £5,000 a year. He may be a man who has been enjoying a large salary as a managing director, and his income may suddenly drop from £10,000 to £5,000 or less. I want very respectfully to put to the Chancellor of the Exchequer a point on which I ask him to be good enough to reassure the House. I want the Chancellor of the Exchequer to give me an answer to this specific question. Take a man with £10,000 a year which he earns in the year ending the 5th of April, 1928. That man sets aside, if he is a prudent man, some £1,100 to pay his Super-tax liabilities on the 1st January, 1929. His income was earned in the year ending the 5th of April, 1241 1928, and in order to meet the Super-tax liability he set aside £1,100 which he will pay to the Exchequer on the 1st January, 1929. That man's £10,000 a year ceased on the 5th April, 1928, and during the current year, 1928–29, his income has dropped from £10,000 to £5,000 The question I want the Chancellor of the Exchequer to answer is this—What will be the amount of that man's liability to the Exchequer, and what will be the demand note presented to him for Surtax on the 1st January, 1930? Will that demand note again be over £l,100, the amount for which he is liable for Super-tax on 1st January, 1929, or will it drop to half or presumably something less than half that amount? I would be obliged if he could give us a specific answer to that specific question, because on that answer turns the case for the Clause I now support.
§ Mr. T. GRIFFITHS
I had not intended to take part in this Debate, but I am very pleased that the Chancellor of the Exchequer is refusing to accept this Clause. About two years ago I happened to be fortunate in the Ballot, and I moved a Motion in the House on the question of the law of inheritance, the inheritance of large fortunes by a minority of the community, and the hon. Member for York (Sir J. Marriott) moved an Amendment to my Motion. He was on that occasion pleading on behalf of the rich who had died; to-day he is pleading on behalf of the rich who are living.
§ Mr. GRIFFITHS
I think that makes my case stronger still, because I was referring to the fact that he moved an Amendment to a Motion that I brought before the House. On that occasion he was pleading for the rich who are dead; to-day he is pleading on behalf of the rich who are living.
§ Mr. GRIFFITHS
Perhaps the Chancellor of the Exchequer did not like to offend his Friends by pointing out to them how generous he has been to the Super-tax payers since he has been Chancellor. 1242 Four years ago he gave them a present of £40,000,000——
That would be relevant on the general Clause, but it is not relevant on this new Clause.
§ Mr. GRIFFITHS
On a point of Order. We are dealing with the question of the Super-tax, and, surely, if hon. Members on the other side can plead on behalf of the Super-tax payers and say that they ought to get some relief, I am in order in pointing out——
That general question is proper to Clause 13. This particular matter deals with a very peculiar case of death and ceasing to be liable to Super-tax. It is a very limited matter and, really, the whole general question of Income Tax and Super-tax cannot be raised.
§ Mr. GRIFFITHS
Surely the Chancellor of the Exchequer in his concluding remarks pointed out that he had no money to give away. Am I not in order in pointing out that the Super-tax payers have already been dealt with very generously by the Chancellor of the Exchequer? £40,000,000 in four years——
These general considerations are not in order here. They will be in order on the Third Reading or on Clause 13, but not on this very limited and technical matter.
§ Sir R. HORNE
I would be reluctant to say anything adverse to the views of the Chancellor of the Exchequer when he says that he must have the money that is involved in the operation of the Clause we are considering. The claims of the revenue come to be paramount where the services of the State require the revenue which is sought, and, accordingly, I am very reluctant indeed to say anything in opposition to the Chancellor's point of view, but I venture to put forward certain considerations which ought to be taken into account. In the first place, I do not think the revenue of the present year is going to be affected by the operation of this Clause, and, if I understand the matter rightly, it will only be in the following year that any revenue 1243 will begin to accrue from this particular provision. Accordingly, there is a year in which the Chancellor of the Exchequer might suitably consider whether this tax must be imposed. The second point is this. My right hon. Friend has said that he requires this sum of money in order to balance the loss which he incurred owing to the change in the imposition of the tax under Schedule E. It is perfectly plain that, as far as this Super-tax element is concerned, this is going to be a recurring tax for a considerable number of years on people now alive, and, accordingly, the incomes to be derived in the aggregate is going to be a very large sum. As far as Schedule E is concerned, I can only see that the Chancellor will lose in one year, the year of the change over.
§ Mr. CHURCHILL indicated dissent.
§ Sir R. HORNE
If that is not so, then I am mistaken, but I would like to have some considered opinion as to the amount he expects to lose by the simplification of Schedule E. As I understood the plan, it was that in turning over you were to shoft from one year to another, which involved taking the same year twice as the basis of assessment, instead of the irregular progression of years. As each year is very like another, the only year in which there would be a loss is the year when the change over took place. Of course, if I am wrong in that and the Chancellor of the Exchequer can show that he will lose any sum comparable with the sum he gains from the additional Super-tax, then that argument falls to the ground. I would be interested to hear how much money he expects to lose, and how the loss occurs.
On the general argument I would remind the Committee that the whole of these proceedings rest upon a fallacy which crept into the speech of the learned Attorney-General last year. The basis of this mistake was that a man who paid Super-tax was alleged to pay Super-tax on a year less than he ought. It is a complete error. Ever since it was instituted the tax has been paid on every year. The revenue officials would have been guilty of a great lapse of duty if they had not collected a tax for every year it is due.
The learned Attorney-General made an extraordinary error in law when he said 1244 that the tax was not paid in the year on which the taxpayer entered upon the Super-tax income. It certainly is, and the fallacy arises from the circumstances pointed out so clearly last week by the light hon. Member for Spen Valley (Sir J. Simon). He said that, while the tax is based upon the revenue of the previous year, it is paid in the year in which it is due. It is only because the revenue of the year before is taken as a basis that people have got into the fallacy of supposing that, in fact, the tax is postponed for the year. It never has been postponed for a year, if it is going to be asserted that, because you have enjoyed the Super-tax income, therefore you must pay, it is obvious that there were a great number of people who enjoyed Super-tax incomes long before any Super-tax was imposed, and you would be as justified in going back over that spell of years as in imposing this tax. There can be no evasion of the fact that this tax is being charged twice in a particular year. The Chancellor of the Exchequer acknowledge that that is true. If it be the truth, then the country only understands it now for the first time. There is no country in the world where there is less evasion of taxes than in this country. You collect your enormous revenue mainly by the belief of the taxpayer that you are dealing with him justly, and because of the co-operation you get from him. It is unwise to destroy that co-operation by anything which will create a feeling of distrust. I would ask my right hon. Friend again to think over this matter before next year, and see if he cannot devise some better means of simplification, which will not involve an injustice.
§ The ATTORNEY-GENERAL (Sir Thomas Inskip)
The Chancellor of the Exchequer has stated broadly the defence and the justification for the matter of which my hon. Friends has been complaining. I do not propose to repeat the broad defence; I am merely anxious to answer two questions, one put by the right hon. Member for Hillhead (Sir R. Home) as to Schedule E, and the other the question as to the hypothetical case raised by the hon. Member for York (Sir J. Marriott). With regard to Schedule E income, the suggestion has been made that there would be £1,000,000 lost to the revenue in one year, but not for each 1245 year in succession. The fact has been overlooked, and is perhaps not generally remembered, that Schedule E income has been a constantly rising income. In 1923 it was £635,000,000; in 1924, £651,000,000; and in 1925, £673,000,000.
§ The ATTORNEY-GENERAL
I do not know where the hon. Member's logic comes from. They are probably not rich people, but poor people. If he would listen he would understand. The point I want to explain to the Committee is that the income of the Schedule E Income Tax payers has been, as shown by these three years, constantly progressing. You may expect, as experience shows that the Chancellor of the Exchequer has a right to expect, that that progress will continue. It is obvious that, when he puts back the basis of charge of Schedule E for one year, as the result of the change he loses the advantage of the progressive increase of Schedule E income. It is not merely for one year. If you go back one year it is quite obvious that every successive year you are always one year behind. As long as the Schedule E income is increasing as it has in the past, so long is the Chancellor of the Exchequer losing the additional income. The only criticism that can be made is that there is no security that the Schedule E income will go on increasing in the same way as it has in the years I have given. Whenever the national income begins to shrink, not only of Schedule E, but of all schedules, of course the position will be different, and I do not know what the Budget of the Chancellor of the Exchequer will be. As long as the income is increasing for Schedule E, the fact is that, by going back one year on the measure of the income, my right hon. Friend does lose in round figures £1,000,000 a year.
The answer, if I may give it much more shortly, to my hon. Friend the Member for York, is that, in the hypothetical case which he put, the income upon which the Super-tax or Surtax payer will have to pay his tax in the second year would be the £5,000, and not the £10,000. May I repeat what I tried to explain a few nights ago, when an Amendment was moved to 1246 Clause 13? There is no year which is taken as the basis of charge in respect of Income Tax twice over. There is technically a year, namely, the year 1928–29, for which Super-tax is charged and Surtax is also charged; but there is no single year the income of which is taken as the measure of liability for either Super-tax or Surtax twice over. In other words, assuming that the income of the gentleman in question in 1927–28 was £10,000, he would pay upon that on the 1st January, 1929. If his income suddenly fell from £10,000 to £5,000 for the year 1928–29, he would then pay Surtax on the 1st January, 1930, on the reduced income of £5,000. That is the answer to the question of my hon. Friend the Member for York. I do not propose, as I have said, to repeat the general defence of the proposals in question.
§ Colonel GRETTON
It seems to me, and I think to other Members of the House, that the Attorney-General has destroyed the case of the Chancellor of the Exchequer on the question of the Schedule E Income Tax. It now appears that the Chancellor of the Exchequer is not going to lose anything at all. All that he is going to lose, according to the explanation given, is some anticipated increase of income in years to come, and I venture to think that by the change he will assure to himself the continuance of the tax for one year longer in case the Schedule E income should commence to fall. There is no case in which the Chancellor of the Exchequer is going to lose any revenue which he has at the present time, but he may lose something, in the years to come, of the increased revenue which the expected increase in Schedule E income allows him to anticipate. If that be so, what becomes of the argument of the Chancellor of the Exchequer that he is balancing, against the loss on Schedule E, the imposition of the increased Surtax of which my hon. Friends have complained? They have made out that case unanswerably, and the only justification that the Chancellor of the Exchequer has is that he cannot afford to lose revenue.
I humbly and respectfully represent to him that he can well afford to lose revenue if he is going to impose an injustice or inequity upon any section of the community, however small. I know 1247 that we are speaking to-night for a very small section of the community, who are not likely very seriously to affect the result of a by-election. [Interruption.] They may be comparatively well-to-do, but comparatively well-to-do, and even rich, people are entitled to justice, and it is a very poor attitude for hon. Members above the Gangway to take that people who are rich or well-to-do are not to be treated justly by the House of Commons. I would impress upon the Chancellor of the Exchequer that there is a great deal more in this matter than he appears to realise, and that he is not going to lose any revenue that he has received in years past or in this present year, but only an anticipated increase, while, if the total income falls, he stands to gain by the change that be is making in the tax under Schedule E.
With regard to the other matter, which is inflicting a very great injustice, and one which is bitterly resented, the right hon. Gentleman the Member for Hillhead (Sir R. Horne) very justly said that this change has not been apprehended by the public. It was put forward in various ways which have not been understood, but, when the persons concerned die, there will be the liability for this tax. This imposition is bitterly resented by a heavily taxed, and often overtaxed section of the community. I do urge the Chancellor of the Exchequer to give this matter further consideration, because I do not want to be driven into the Lobby against him.
Sir J. DAVIDSON
I do not want to register my vote in favour of this proposed new Clause without giving my reasons for doing so. I feel very strongly on the subject, and I do think that there is some cause for using the term "surreptitious." The public, generally speaking, have felt that this is a surreptitious tax, or, rather, a surreptitious way of imposing a tax. It amounts to a very considerable sum. It is true that it is spread over a generation, but it amounts to something like £50,000,000, and I do think that it warranted more attention being paid to it and more explanation by the Chancellor of the Exchequer last year, and, indeed, the moving of a Financial Resolution on the subject at the time. The whole thing seems rather to have been skated over and skirted round without having proper attention given to it.
1248 Further, as my right hon. Friend the Member for Burton (Colonel Gretton) has said, there is a very heavy burden on the direct taxpayer. The present Government has inflicted additional Death Duties, and here is a still further Death Duty, and a very heavy one, which falls most heavily on those who are really incapable of standing it. It cuts right across the whole principle of direct taxation, which is that the burden should fall on those shoulders which are most capable of bearing it. In this case it is doing nothing of the kind; the hardship is falling more on those who are incapable of bearing it. The Labour party have been rather jeering at this proposal, but I would ask them what would be the position supposing that they had a Speaker in the House of Commons who had no means at all, and who died when in office, leaving a wife and children who would have to bear this heavy tax on his estate. The same thing applies to all those who are in receipt of earned incomes and earned incomes only. They may be very considerable, but they cease on the death of the recipient, and the whole weight of this tax falls on his family. I consider that it is a monstrous tax imposed in a very unfortunate way, and I shall be forced to go into the Division Lobby against it.
§ Major KINDERSLEY
I want just to controvert one point that has been made in justification of this tax. It is said that, because the Super-tax payer missed a year to begin with when Super-tax was imposed, therefore it is just that he should pay the tax now. Suppose that a man in 1910 had just begun to earn a fair income which had only just reached the Super-tax level, and suppose that by the year 1928–29 his income, instead of being only £3,000, is now £20,000 a year. Why should the State, because he did not pay Super-tax on the small income that he had at the beginning, mulct him on the basis of the £20,000 a year? That is absolutely and totally unjust. If the Government really mean that people ought to have paid this tax before, why have not they extracted it from all the people who died before this date? This tax cannot be justified on those grounds, and I feel very strongly that the method by which it is imposed is a mistake. The Super-tax payers as a whole pay their tax willingly. 1249 As has been said by the right hon. Gentleman the Member for Hillhead (Sir R. Horne), there are no people who pay their taxes more willingly than the taxpayers of this country, and it is a great and grave mistake to cause them to have any feeling, such as they have now, that in some sense they have been had. I can assure the Chancellor of the Exchequer that that feeling, rightly or wrongly, is very prevalent, and I am quite certain that, if it had been understood a
§ year ago that this amount of £60,000,000 was going to be extracted in course of time from Super-tax payers over and above what they are now paying, there would have been far greater protests at the time. I, therefore, support the Clause.
§ Question put, "That the Clause be read a Second time."
§ The Committee divided: Ayes, 59; Noes, 200.1251
|Division No. 230.]||AYES.||[7.26 p.m.|
|Acland-Troyte, Lieut.-Colonel||Hannon, Patrick Joseph Henry||Runciman, Hilda (Cornwall, St. Ives)|
|Balfour, George (Hampstead)||Harland, A.||Runciman, Rt. Hon. Walter|
|Bird, Sir R. S. (Wolverhampton, W.)||Harney, E. A.||Salter, Dr. Alfred|
|Bourne, Captain Robert Croft||Harris, Percy A.||Sandeman, N. Stewart|
|Boyd-Carpenter, Major Sir A. B.||Hartington, Marquess of||Simon, Rt. Hon. Sir John|
|Brassey, Sir Leonard||Henn, Sir Sydney H.||Sinclair, Major Sir A. (Caithness)|
|Brown, Ernest (Leith)||Home, Rt. Hon. Sir Robert S.||Sprot, Sir Alexander|
|Butt, Sir Alfred||Howard-Bury, Colonel C. K.||Steel, Major Samuel Strang|
|Cayzer, Sir C. (Chester, City)||Hutchison, Sir Robert (Montrose)||Tomlinson, R. P.|
|Cecil, Rt. Hon. Sir Evelyn (Aston)||Jones, Henry Haydn (Merioneth)||Warner, Brigadier-General W. W.|
|Clarry, Reginald George||Jones, W. N. (Carmarthen)||Wells, S. R.|
|Davidson, Major-General Sir J. H.||Kindersley, Major Guy M.||White, Lieut.-Col. Sir G. Dairymple|
|Davies. Mai. Geo. F. (Somerset, Yeovil)||Kinloch-Cooke, Sir Clement||Wiggins, William Martin|
|Evans, Capt. Ernest (Welsh Univar.)||Macdonald, Sir Murdoch (Inverness)||Williams, Com. C. (Devon, Torquay)|
|Fenby, T. D.||Marriott, Sir J. A. R.||Williams, C. P. (Denbigh, Wrexham)|
|Forrest, W.||Meyer, Sir Frank||Winby, Colonel L. P.|
|Foxcroft, Captain C. T.||Nail, Colonel Sir Joseph||Wragg, Herbert|
|Gates, Percy||Nicholson, Col. Rt. Hon. W. G. (Ptrsf'ld.,|
|Gretton, Colonel Rt. Hon. John||Power, Sir John Cecil||TELLERS FOR THE AYES.-|
|Hamilton, Sir R. (Orkney & Shetland)||Reid, D. D. (County Down)||Sir Henry Buckingham and Sir|
|Hanbury, C.||Remer, J. R.||William Davison.|
|Agg-Gardner. Rt. Hon. Sir James T.||Charteris, Brigadier-General J.||Gilmour, Lt.-Col. Rt. Hon. Sir John|
|Alexander, E. E. (Leyton)||Christie, J. A.||Goff, Sir Park|
|Alexander, Sir Wm. (Glasgow, Cent'l)||Churchill, Rt. Hon. Winston Spencer||Gower, Sir Robert|
|Allen, Sir J. Sandeman||Cobb, Sir Cyril||Grant, Sir J. A.|
|Applin, Colonel R. V. K.||Cochrane, Commander Hon. A. P.||Grotrian, H. Brent|
|Ashley, Lt.-Col. Rt Hon. Wilfrid W.||Cohen, Major J. Brunel||Groves. T.|
|Astbury, Lieut.-Commander F. W.||Cooper, A, Duff||Grundy, T. W.|
|Atkinson, C.||Cope, Major Sir William||Guinness, Rt. Hon. Walter E.|
|Baldwin, Rt. Hon. Stanley||Cove, W. G.||Gunston, Captain D. W.|
|Barclay-Harvey, C. M.||Cowan, Sir Wm. Henry (Islington, N.)||Hacking, Douglas H.|
|Barker, G. (Monmouth, Abertillery)||Craig, Capt. Rt. Hon. C. C. (Antrim)||Hall, Lieut.-Col. Sir F. (Dulwich)|
|Beamish, Rear-Admiral T. P. H.||Craig, Ernest (Chester, Crewe)||Hammersley, S. S.|
|Benn, Sir A. S. (Plymouth, Drake)||Croft, Brigadier-General Sir H.||Harrison, G. J. C.|
|Bennett, A. J.||Crooke, J. Smedley (Deritend)||Haslam, Henry C.|
|Bentinck, Lord Henry Cavendish.||Crookshank, Cpt. H. (Lindsey, Gainsbro)||Headlam, Lieut.-Colonel C. M.|
|Bethel. A.||Culverwell, C. T. (Bristol, West)||Henderson, Capt. R. R. (Oxf'd, Henley)|
|Betterton, Henry B.||Curzon, Captain Viscount||Henderson, Lieut.-Col. Sir Vivian|
|Birchall, Major J. Dearman||Davies, Sir Thomas (Cirencester)||Heneage, Lieut.-Col. Arthur P.|
|Blundell, F. N.||Dawson, Sir Philip||Hennessy, Major Sir G. R. J.|
|Boothby, R. J. G.||Drewe, C.||Hirst, G. H.|
|Bowerman, Rt. Hon. Charles W.||Eden, Captain Anthony||Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.|
|Bowyer, Captain G. E. W.||Edmondson, Major A, J.||Holbrook, Sir Arthur Richard|
|Braithwaite, Major A. N.||Edwards, J. Hugh (Accrington)||Hope, Capt. A. O. J. (Warw'k, Nun.)|
|Brass, Captain W.||Elliot, Major Walter E.||Hopkins, J. W. W.|
|Bridgeman, Rt. Hon. William Clive||England, Colonel A.||Horlick, Lieut.-Colonel J. N.|
|Briggs, J. Harold||Erakine, Lord (Somerset, Weston-s.-M.)||Hudson, R. S. (Cumberl'nd, Whiteh'n)|
|Briscoe, Richard George||Evans, Captain A. (Cardiff, South)||Hume, Sir G. H.|
|Brittain, Sir Harry||Everard, W. Lindsay||Hurst, Gerald B.|
|Bromfield, William||Fairfax, Captain J. G.||Iliffe, Sir Edward M.|
|Buchan, John||Falle, Sir Bertram G.||Inskip, Sir Thomas Walker H.|
|Burgoyne, Lieut.-Colonel Sir Alan||Fanshawe, Captain G. D.||Jackson, Sir H. (Wandsworth, Cen'l)|
|Burton, Colonel H. W.||Fermoy, Lord||Jenkins, W. (Glamorgan, Neath)|
|Cadogan, Major Hon. Edward||Fielden, E. B.||Jephcott, A. R.|
|Campbell, E. T.||Finburgh, S.||Kennedy. A. R. (Preston)|
|Cecil, Rt. Hon. Lord H. (Ox. Univ.)||Fraser, Captain Ian||King, Commodore Henry Douglas|
|Chadwick, Sir Robert Burton||Galbraith, J. F. W.||Lister, Cunliffe, Rt. Hon, Sir Philip|
|Chamberlain, Rt. Hon. N. (Ladywood)||Gibbins, Joseph||Little, Dr. E. Graham|
|Chapman, Sir S.||Gillett, George M.||Lloyd, Cyril E. (Dudley)|
|Loder, J. de V.||Price, Major C. W. M.||Stuart, Hon. J. (Moray and Nairn)|
|Lucas-Tooth, Sir Hugh Vere||Radford, E. A.||Sugden, Sir Wilfred|
|Luce, Maj.-Gen. Sir Richard Harman||Ralne, Sir Walter||Sutton, J. E.|
|Lumley, L. R||Ramsden, E.||Templeton, W. P.|
|Lynn, Sir R. J.||Rentoul, G. S.||Thorn, Lt.-Col. J. G. (Dumbarton)|
|Macdonald, R. (Glasgow, Cathcart)||Rhys, Hon. C. A. U.||Thompson, Luke (Sunderland)|
|McDonnell, Colonel Hon. Angus||Richardson, R. (Houghton-le-Spring)||Thomson, Rt. Hon. Sir W. Mitchell|
|MacLaren, Andrew||Roberts, E. H. G. (Flint)||Thurtle, Ernest|
|McLean, Major A.||Robinson, Sir T. (Lanes, Stretford)||Tinker, John Joseph|
|Macmillan, Captain H.||Robinson, W. C. (Yorks, W. R., Elland)||Titchfield, Major the Marquess of|
|Mac Robert, Alexander M.||Ropner, Major L.||Tryon, Rt. Hon. George Clement|
|Malone, Major P. B.||Ruggles-Brise, Major E. A.||Varley, Frank B.|
|Manningham-Buller, Sir Mervyn||Salmon, Major I.||Vaughan-Morgan, Col. K. P.|
|March, S.||Samuel, A. M. (Surrey, Farnham)||Wallace, Captain D. E.|
|Margesson, Captain D.||Sanders, Sir Robert A.||Ward, Lt.-Col. A. L. (Kingston-on-Hull)|
|Mason, Colonel Glyn K.||Sanderson, Sir Frank||Watson, Sir F. (Pudsey and Otley)|
|Mitchell, S. (Lanark, Lanark)||Sandon, Lord||Watson, Rt. Hon. W. (Carlisle)|
|Monsell, Eyres, Com. Rt. Hon. B. M.||Savery, S. S.||Watts, Sir Thomas|
|Moore, Sir Newton J.||Shaw, Lt.-Col. A.D. Mcl. (Renfrew, W.)||Watts-Morgan, Lt.-Col. D. (Rhondda)|
|Morrison, R. C. (Tottenham, N.)||Shepperson, E. W.||Wilson, R. R. (Stafford, Lichfield)|
|Newman, Sir R. H. S. D. L. (Exeter)||Simms, Dr. John M. (Co. Down)||Winterton, Rt. Hon. Earl|
|Newton. Sir D. G. C. (Cambridge)||Skelton, A. N.||Withers, John James|
|O'Neill, Major Rt. Hon. Hugh||Slaney, Major P. Kenyon||Womersley, W. J.|
|Perring, Sir William George||Smithers, Waldron||Woodcock, Colonel H. C.|
|Pethick-Lawrence, F. W.||Somerville, A. A. (Windsor)||Worthington-Evans, Rt. Hon. Sir L.|
|Peto, G. (Somerset, Frome)||Spencer, G. A. (Broxtowe)||Yerburgh, Major Robert D. T.|
|Pilcher, G.||Stanley, Lieut.-Colonel Rt. Hon. G. F.|
|Pilditch, Sir Philip||Stanley, Lord (Fylde)||TELLERS FOR THE NOES.—|
|Pownall, Sir Assheton||Stanley, Hon. O. F. G. (Westm'eland)||Mr. Penny and Sir Victor Warrender.|
|Preston, William||Streatfeild, Captain S. R.|
§ It being after Half-past Seven of the Clock, and there being Private Business set down by direction of the Chairman of Ways and Means under Standing Order No. 8, further Proceeding was postponed without Question put.