POSTPONED CLAUSE 14.—(Deductions in respect of children.) (Hansard, 27 June 1928)

§ Mr. DALTON

This is a very interesting and important Clause which was postponed by agreement with the Chancellor from an inconvenient hour this morning. This proposal for the increase of the allowances for the children of Income Tax payers has often been made before from the benches behind me, and my hon. Friends would be ungrateful if they did not welcome its ultimate acceptance by the right hon. Gentleman. I am very glad to see that the form in which the increase has been made has taken the shape of increasing the flat rate allowance in respect of each child, and that, the alternative proposal put forward by the Eugenics Society and others to make an increased relief in proportion to the income of the taxpayer has been rejected. It is obviously fairer and bettor to follow the course pursued here of increasing the flat rate allowance per child. We welcome this proposal among other reasons because it makes some further advance towards the ideal of the distribution of income according to need. It is evident that the real basis of this proposal is that the needs of a family, say, of five persons are greater than those of a single person.

10.0 p.m.

But there are certain questions of equity which arise. There is, in particular, the question of equity as between the Income Tax payers as a class and the large majority of the population who 643 are not privileged to pay Income Tax at all. The advantages given by this Clause are confined, of course, to a comparatively small minority of the population, because only that minority is above the present level of liability to Income Tax. If the Chancellor of the Exchequer will recall the calculations of the Colwyn Report upon the comparative burden of taxation on different classes of the community, he will remember the figures which show that the proportion of the smallest incomes paid in taxation is larger than the proportion of their income paid by the lower level of Income Tax payers who are getting the chief benefit from this Clause. I submit that, although we welcome this Clause, it cannot be the last word in the adjustment of the burden of taxation because the effect of this Clause upon the general distribution of the burden of taxation in this country is still further to increase the disparities between the heavy burden imposed by the food taxes and other indirect taxes on the poorest section of the community and the lighter burden imposed upon the man, with, say, £500 a year and three or four children in respect of whom allowances can be claimed.

It is clear that, if we are to reach any real equity in the general distribution of the tax burdens of the country, we must go on and add, if not in this Budget then in future Budgets, to the provisions made by this Clause certain further provisions for the reduction of indirect taxes. Or perhaps, still more daring, we must go forward and confront the possibility that we may require to give repayments from the general total of the wealth of the country to the fathers and mothers of families even though they are below the Income Tax level. That is a matter which is at present under consideration by economists and others, as to how far it is possible to bring into operation a scheme of child allowances on a national scale. Though I assume that it would not be in order to discuss that question on this Clause, yet it would be more interesting than many subjects which we, have discussed during these Debates. No party in this House is yet committed to that principle, but quite clearly this Clause is going to lead on to further extensions of that kind and to stimulate 644 the discussion of such wider and more daring projects. If, later on, we confront such an extension, we shall find very interesting examples of the way in which these child allowances are being paid on a wide national scale in New Zealand, in Australia, and elsewhere. Those Members of the Conservative party who take a passing interest in the British Empire will do well, in future discussions of these matters, to study what has been already done in those Australasian Dominions.