PAYMENT OF INCOME TAX BY INSTALMENTS.

HC Deb 07 May 1931 vol 252 cc589-659

"That Sub-section (2) of Section one hundred and fifty-seven of the Income Tax Act, 1918, as amended by Section twenty-one of the Finance Act, 1927, shall be further amended so as to provide that income tax, instead of being paid in two equal instalments, shall, in the cases to which the said Sub-section applies, be paid in two instalments of which the first shall be an amount equal to three-quarters of the tax and the second shall be" an amount equal to one-quarter of the tax."

Mr. CHARLES WILLIAMS

I beg to move, in line 5, to leave out the word "three-quarters," and to insert instead thereof the word "seven-twelfths."

It will be remembered that the Chancellor of the Exchequer, when making his Budget statement, in dealing with the necessity for changing the tax in this respect, said that the reason for the change was that it was necessary to find some money to tide over the temporary difficulties of the low yield which were largely caused by the failure of the Income Tax to come up to his expectations. In other words, the Income Tax is not giving the yield that he would like, which shows that the incomes of the country are falling, and he then proceeds to shove on an additional amount of taxation in the hope that he will make up his losses in that way. This Amendment would take away two-thirds of his proposed increase, and the loss to the Exchequer would be rather more than £6,500,000. It may be argued by the Chancellor, or whoever replies on his behalf, that we should have put down an Amendment to take away the whole amount, but I am sure that, if that argument is used against us, we shall not hesitate to withdraw the Amendment if the Chancellor will withdraw the whole of this Resolution; and I do not know that, if I went back to some of the speeches that have been made on this subject, I should not be able to find very excellent reasons why that should be done.

The class of taxpapers who are being mainly hit by this increase—and it is an increase as far as this financial year is concerned—are, in the first place, those who come under Schedule B. Under Schedule B come what little profits there may be to the occupiers of land. In other words, the payers under this Schedule will be the farming community. This Government and previous Governments have expended a vast quantity of money in endeavouring to improve forestry as well as agriculture. I should like to ask whether it is worth, on the one hand, taking the taxpayers' money to increase forestry or the agricultural industry and, on the other hand, directly they show any sign of success to taking it away? I believe this also applies to woodlands, and when you are trying to preserve by every means in your power rural amenities, when you have the burden on these amenities increasing, it is a pity to deal with them in this way.

When you come to the next Schedule, that is, having to pay Income Tax three-quarters in January and a quarter in July, you come up against a very large number of people who are engaged in professions, such as doctors and others. I see a look on the face of an hon. Member opposite which seems to say that these professional people do not mind. I am not quite sure whether certain professional people come under D or E, but it is conceivable that a very large number of trade union officials may find themselves caught. Before hon. Members go too far in sneering at my request to the Government to give this concession, I would ask them to remember that it is very essential in their party that the good will of these people should be retained by the Government. I would also ask the Government to remember that, if they do this, and by any chance things should mature by about Christmas time, they might be in a very dangerous position. This Schedule even affects the Easter offerings of the clergy, and that is a point that is worth consideration. It shows how far-reaching the effect of these proposals is.

The real reason why I object most to Schedule D is that a very considerable proportion of the smaller trading companies will have to pay their Income Tax earlier. It is not particularly easy for them to carry on their trade or industry, and a very good case can be made out for them merely from the point of view of doing nothing to handicap them. Can the Financial Secretary explain precisely all the reasons why C is left out? The Chancellor of the Exchequer gave some reasons, and, if there are reasons for D and B, surely we should have full reasons for C. Further, I would ask the President of the Board of Trade if it is intended to make any difference in the deduction of Income Tax at the source? I know what the Chancellor has said, but I think we should have full information.

4.0 p.m.

As to the people who come in under Schedule E, here you get the ordinary public official and a certain number of people scattered over the country who are in the employment of local authorities. These people, during the last year, in many cases, have had very much heavier burdens placed on their shoulders in the matter of work. They have been very valuable public servants to almost every branch of the community. Many of them are comparatively well off, but there are a good many struggling with families whose feelings towards the Chancellor next Christmas will not be particularly pleasant. I do not think it is quite right to deal with any of these questions in the way they are being dealt with. The most-particular reason why we ought not to give the Government this new increase of taxation is because the whole of it is borrowing and anticipating on next year's revenue. You are not merely borrowing on next year's revenue, but the year after you are borrowing again. The Government will refer me to Income Tax Acts of bygone days when the concession was made of dividing the tax, as it got heavier, between the two periods, 50 per cent. in January and 50 per cent. in July. You are not taking away the whole of the 50 per cent. in July, but I have some reason for thinking that some Members of the Treasury must have had great difficulty in bringing their mind to accept this position. Does the Financial Secretary remember saying four years ago: When that proposal was first put forward, I was inclined to be sympathetic towards it, but after thinking it over I have come to the conclusion that it would cause a great deal of hardship and inconvenience."—[OFFICIAL REPORT, 19th May, 1927; col. 1443, Vol. 206.] That hardship and inconvenience was to the landlord and to a very much larger class of taxpayers who have greater powers of borrowing than the people with whom you are dealing now. I have no doubt that there will be Members of the Government who will say, as the Chancellor said in his Budget speech, that whatever else happens no Member of the Conservative party can possibly throw stones at the present time. That was the whole gist of the Chancellor's speech. Whatever may be the position of some Members of my party, and although I probably am as loyal a supporter of the Conservative party as any man in this House and do as much for it as most people, in some ways, on that occasion I was the first person to raise my voice against the proposal, and I did so also on the Report stage of the Bill. That entitles me to maintain now that I am justified in asking the Chancellor to give the fullest possible consideration to the matter. My main reason for opposing the proposal was then, and is now, that I consider it thoroughly bad finance. You never "catch up" in your financial year. I see that a certain number of Members of the Liberal party are interested in this question. I hope they will be loyal to the feelings of their leader on this particular occasion. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) made the statement: This is an increase of 50 per cent. upon the Income Tax paid by a certain class of people for one year. That is putting it in words far better than any I can use. Then the right hon. Gentleman went on to say: Pay 50 per cent. more for one year, and next year you will only pay what you did before, and the recording angel will keep the account. No one could misjudge that statement for a minute. When one comes to the recording angel it is inevitable that one thinks of the right hon. Member the Leader of the Liberal party. Further he said: That is really not fair … It is really rather too like a trick."—[OFFICIAL REPORT, 13th April, 1927; col. 408, Vol. 205.] But that was a case of dealing not with small people only, but with the dukes—it was unfair to the dukes and big landowning people of the country. But here we have a very much stronger case. We have a case which affects many of the smallest and most struggling firms, many officials, the very large class of persons who have fixed incomes. Surely there are no Liberals who can possibly support a Resolution of this sort, which savours in many ways of a not very creditable trick on the part of the Chancellor of the Exchequer. Let me give a further quotation which is of great value. It is from the present Chancellor of the Exchequer himself. I notice the tendency in the Chancellor's speech the other day to try to make out that this was really not a very great sacrifice. But the right hon. Gentleman said on 12th May, 1927, in referring to a proposal almost similar to this: Those who pay under Schedule A will pay three times in 12 months instead of twice."—[OFFICIAL REPORT, 12th April, 1927; col. 237, Vol. 205.] Here is one more quotation from a speech by the present Chancellor on 28th April, 1927: The objection to this proposal is not so much on principle as upon the nature of injustice that may be involved."—[OFFICIAL REPORT, 28th April, 1927: col. 1125, Vol. 205.] That was on an occasion when he was attacking the Government of the day. To-day the right hon. Gentleman is in office and in power, and he is responsible for these transactions. He is deliberately singling out these small people in every class of the community, except certain wage-earners and those who get their income from land or have their fax deducted at the source, and one or two other classes of people. He is taking the professional classes and dealing with them in a way which is grossly unfair. He is making them bear the burden today and is not spreading it fairly over the broadest backs. The average household invariably finds its financial position difficult just about Christmas time. It is a time when the bills come in, and when the head of the household is accustomed to pay a certain amount of Income Tax. This concession of half-yearly payments was given many years ago because of the height of Income Tax. When the tax was 1s. in the £ the full payment did not matter so much, but, as has been pointed out by many hon. Members, when you get an Income Tax of 4s. or 4s. 6d. in the £ the position becomes very much more difficult for these people. I ask whether on the ground of common decency to these people, who do very much in the interests of the country, the Chancellor ought not to refrain now from placing an increasing burden on their backs. For these reasons I move the Amendment.

Sir HUGH O'NEILL

I beg to second the Amendment.

There is no part of the financial proposals of this year which has aroused wider interest amongst the community generally than this particular increase in Income Tax—because that is really what it amounts to. I suppose there has been no proposal in recent years which has given rise to more mathematical differences of opinion. I am sure that the right hon. Gentleman the President of the Board of Trade is sufficient of a mathematician to be able to make this matter really clear to the House when he comes to reply. Are people going to pay more or are they not? He will probably tell us that they are not. But one point is absolutely and manifestly clear, and that is that in the financial year ending 31st March, 1932, the persons who come under these particular Schedules will have to pay, not 4s. 6d. in the £, but 5s. 7½d. That is beyond any question or doubt. In the following financial year, ending March, 1933, they will pay the same 4s. 6d. as they paid before. Therefore, there is no doubt whatever that this is a definite increase of taxation to the extent of 1s. 1½d. in this financial year upon a particular class of Income Tax payers.

What is that class? As my hon. Friend has stated, it is largely a class of professional people whose incomes are not large, who will be very seriously handicapped and hit by this additional impost, coming as it will at a very inconvenient time. I know it is said, as an explanation and palliation of this proposal, that the late Chancellor of the Exchequer did the same thing two years ago. But when we examine it we find that he did not really do the same thing. At least what he did will not have anything like as bad an effect as this proposal. What the right hon. Member for Epping (Mr. Churchill) did was to anticipate the payments of tax by those who came under Schedule A, and everyone knows that on the whole people who pay tax under that Schedule are far better able to afford the increase than will be the persons who will be hit by this particular proposal. Because Schedule A Income Tax payers were asked to pay extra in one financial year two years ago, I do not think that is any excuse for the particular proposal which the Government now put forward.

There is one other point which deserves mention, and that is that the proposal will undoubtedly have some effect upon the trade of the country next Christmas. We all know that nothing probably is more inconvenient to the average person than having to meet In come Tax demands every year. This particular demand will come upon this class of people just at a time when otherwise they would probably be thinking of spending rather more. This year they will have to curtail their Christmas expenditure. I therefore think that the proposal will have some effect upon the trade of the country. From that point of view alone I should have thought that it was hardly worth doing. I have heard it said more than once, "Oh, but it does not really matter, because the taxpayer can borrow this extra money quite easily." Can he? Can the particular class to be affected by this extra imposition easily borrow the extra money? I doubt it very much. Some of them may be able to do so—some of the better circumstanced; but a great many will not be able to do so. It will be a real hardship to them, and one which they will find great difficulty in meeting.

That is all that I propose to say about the details. The general principle, however, is of great importance—the principle that you are here quite definitely increasing the direct taxation of the country in the current financial year. That in itself is a very grave matter, in view of the trade depression and the general difficulties which lie before us. I wish it had been possible for the Chancellor of the Exchequer to have met his Budget deficit in some other way than by a proposal to which there are so many grave objections.

Mr. MARJORIBANKS

The Chancellor of the Exchequer produced a scheme on Monday for the confiscation of land, under the guise of taxation. Here he is imposing taxation under the pretence of the withdrawal of a privilege. I want to point out that this is not really the withdrawal of a privilege, but is fresh taxation. It is beyond controversy that money is to be extracted from the taxpayers as Income Tax that they will never be able to get back. That has gradually been brought home to the intelligence of all thinking people who have studied this proposal. My concern is not for the State, whose resources are supposed to be diminishing, but rather on behalf of the individual who will never get his money back. The only thing that could possibly give the taxpayer any relief would be, either the end of the world or the coming of the Red revolution, and as neither the end of the world nor the millennium of the hon. Member for Bridgeton (Mr. Maxton) is likely, I do not think the taxpayer can look forward to any relief.

The privilege that the Chancellor intends to withdraw was given as a measure of War relief, when the particular class to whom we are referring, the professional class, had to bear an immensely heavy burden under War taxes, a far greater burden than it had ever borne before, and it was thought only right and proper to give this relief for one year, in order that that class might accustom itself and its finances to the War-time situation. It was acknowledged to be a relief of taxation for that one year, and in the same way it must be acknowledged that this present proposal is an increase of taxation for next year. I object to this tax. It is a furtive tax. It is a specious tax. It is a dishonest tax. It has not got the honesty of explaining that it is a tax. It goes by the name of "withdrawal of relief." It has not the courage to show its ugly face. It comes before us in disguise, in order to conceal its ugly and wicked face, so that it should not arouse too much indignation in the country. That is what it amounts to. It is one of the most unpleasant features of the Budget that the Chancellor has introduced in order to maintain his incorruptibility. With this and the Land Values Tax he comes forward and puts an immensely heavily increased taxation on one class.

I hate to take myself as an example, but I would like to point out how unwise this taxation is. Take myself, as the case of a man who tries to earn his living, and is also a rentier. I would not object so much if the Chancellor of the Exchequer had attacked my position as a rentier, but he has attacked my position as a wage-earner.

Mr. THORNE

A wage-earner?

Mr. MARJORIBANKS

Certainly! What is the result? The result is that if my wages, or the fees or royalties that I earn, are to be taxed, I am thrown back on my position as a rentier. The Chancellor will be putting this increase of 1s. in the £ on my taxation. It would have been far fairer to raise taxation by a much smaller amount all round. This will fall upon the professional people, who really are, in spite of what the hon. Gentleman says, trying to earn their living, as well as being Members of Parliament.

Mr. THORNE

What are you doing?

Mr. MARJORIBANKS

Professional people have to maintain a certain standard of life. They have to face all the vicissitudes of life, without having their occupation or their health insured, unlike many of the supporters of hon. Members opposite, and unlike many of those hon. Members themselves. The illness of a child may come upon them at a very inconvenient moment, and may demand capital expenditure and expenditure from their revenue. Christmas is a most unfortunate time to be extracting this tax. Christmas used to be a season of festivity and of gladness. I think it is becoming a universally dreaded time. If the Chancellor of the Exchequer's demand is allowed to go through without Amendment, the best thing he could do would be to alter the date of Christmas to July.

This is a fundamental change of policy in our English revenue system. In the old days, or I should say, up to now, collectors have always been under the local commissioners. It is proposed that they should be put under the Revenue Authorities. Why? It is to put the screw on. Under the old system, the local collector would be aware of the conditions of local people, and he might know that upon this trader or that professional man the burden of an immediate tax might be fatal. He will go to the commissioners and say: "Look here, I think this tradesman had better be allowed a few weeks' or a few months' grace." If the commissioners were convinced, there the matter would end. Now the unfortunate professional man will have the tax-collector on his doorstep, inspired with the idea that the taxpayer has the money in his waistcoat pocket and ought to hand it over to the revenue officer whenever it is demanded. The beneficent rule of the local commissioners, who know so well what they are able to do through the Fax collectors, and whose efforts have brought relief and benefit to the taxpaying community, would be brought to an end.

It is said that there is a precedent, in what was done by the right hon. Gentleman the Member for Epping (Mr. Churchill). It is fair to draw a distinction between the depredations of the right hon. Member for Epping and those of the Chancellor of the Exchequer. The real distinction is between ownership of land and the practice of a profession, and that is the distinction between the two classes of people. The landowner has his land, and the worst that can happen to him is that his tenants will be unable to pay. It is true that the landowner has very heavy burdens laid upon him, which it is now the intention of the Chancellor of the Exchequer grievously to increase. The professional man, and especially the trader, may not only have no money at all, but he may be faced with a very heavy liability. He may not only be unable to pay his taxes, but he may have a very heavy loss on the year. There is machinery, under the Income Tax, for a man to recover taxes which were overpaid or which had been extracted prematurely by the revenue, but that is a process which is always vigorously resisted by the Revenue authorities. It is notoriously difficult to recover money which is overpaid. I ask the Chancellor of the Exchequer to reconsider this matter. Is it fair to put the tax—and it is a tax of over £1,000,000—on one particular class? It is only honourable and just to consider all the circumstances. I was told by one member of my own profession, one who is not in a high position and who is not yet known, and who is just able to keep his head above water, that he is putting £l a week into a sinking fund, in order that he and his wife shall not have a miserable and cheerless Christmas this year.

Mr. BENSON

I should not have risen in this Debate but for the rather fantastic speech of the hon. Member for Eastbourne (Mr. Marjoribanks). He said that this £10,000,000 advancement of Income Tax was increased taxation of 1s. in the £. It is nothing of the kind. It is merely an advance of payment to the Exchequer of £10,000,000 by six months. It asks the taxpayer to find that £10,000,000 six months earlier. It is a perfectly simple sum. The cost to the taxpayer is in loss of interest for six months on £10,000,000. Hon. Gentlemen opposite may smile. If there is anything graver than that, let them explain it. At 5 per cent. the interest on £10,000,000 for six months is £250,000. That sum does not represent an increased burden of 1s. in the £ on the Income Tax. If hon. Gentlemen opposite will work it out, they will find that it represents an increased burden of one-third of a penny in the £. That is the burden that the Chancellor of the Exchequer is throwing upon the Income Tax payers. They will have to pay the money, and it is merely a question of whether they shall pay the money in July or in January. The money must be paid, and would be normally paid on the later date. I repeat that the only burden is the loss of interest on £10,000,000, which works out at one-third of a penny. Possibly, there is also some slight inconvenience in finding the money earlier. So far as the inconvenience goes, it is always inconvenient to find money for the tax collector. We realise that, as much as hon. Gentlemen opposite. In present-day circumstances, surely the Chancellor of the Exchequer is to be congratulated, when he has cut down the burden to a mere one-third of a penny increase in the Income Tax, and is only asking for a little inconvenience.

Mr. ERNEST BROWN

I did not intend to intervene in the Debate, but for the fantastic speech of the hon. Member. I was very much surprised at his argument, and I wondered whether the President of the Board of Trade or his chief will agree with his argument. What will become of the whole Income Tax of the land on that basis, I do not know. Suppose a Cabinet Minister now getting £5,000 a year, is dismissed from his post next November and he comes back to this House at £400 next year. He will have to pay on the previous year's assessment, that is to say, on £5,000. The hon. Gentleman suggests that the difference between £5,000 a year and £400 a year, for Income Tax purposes, is merely the difference between the interest. I can only describe that as a fantastic argument, as he described the argument of the hon. Member for Eastbourne (Mr. Marjoribanks).

I do not think this point has been raised in this Debate. It is a very serious one, and is not to be dismissed in this manner. The Income Tax proposal will put a very heavy burden on many hard-hit working people next January, and will not be in terms of one-third of a penny at all, but too often 25 per cent. more than they would otherwise have had to pay. The three years' average for the whole of our industry having been abolished may possibly now be an advantage to big industrialists, because they can get an accommodation at the banks. The three years' average was by no means a good thing for the professional man or the small trader. For a long time, indeed, his income has been on a descending scale. His £1,000 salary has gone down to £750 and next year down to £600, but each year he has had to pay on the previous year's salary, although he does not get the income. He is paying on the income which he no longer gets. Supposing last year he got a £600 salary, after descending from £1,000. Although his income is only £600, he will have to find, in January next year, 25 per cent. more in Income Tax.

It is a very serious proposition. Looking through the totals of Schedules B, D and E, I notice that £10,000,000 does not account for a quarter of the sum total of B, D and E which was received last year, showing that the Chancellor of the Exchequer and the Treasury know that they are going to have a great deal more difficulty and hardship in collecting the money than the Chancellor of the Exchequer suggested in his speech. The Minister opposite shakes his head I shall be very glad to have the figures. I do not believe that he will get the money as easily as he thinks he will. He is hitting persons very hard by this new exercise of ingenuity which makes the right hon. Gentleman the Member for Epping (Mr. Churchill) appear to be not quite as clever as he appeared to be two years ago. There is a great deal of force in the argument behind the Amendment, and it ought not to be brushed aside in a fantastic way by suggesting that the burden will not be felt greatly by the hardworking body of professional men and traders, and, in some cases, small agriculturists.

Mr. ARTHUR MICHAEL SAMUEL

The hon. Gentleman the Member for Chesterfield (Mr. Benson) twitted my hon. Friend behind about the loss of a few pence in interest. It is a pity that he did not go a little further—I thought I detected that he was being stopped by the hon. Member sitting beside him by his coat tail being pulled—for he might have told us that the true effect of this new legislation was that the taxpayer would actually receive a gift of money from the Treasury. In the days when the Schedule A proposal was brought before the Committee, and when it was suggested that there should be a rearrangement of the payment of taxes such as is now proposed, we studiously avoided touching a re-arrangement in that form. I wish to make it perfectly clear to hon. Gentlemen opposite who may attempt to use the Schedule A example as an excuse for their using this present change in taxation, that we studiously avoided it because we knew that it would injuriously affect people who were least able to bear the tax. My right hon. Friend said—and I feel that it is true—that many of the smaller Income Tax payers will be compelled to borrow. Why should the Government compel those people to borrow? What a shame it is that these small men, shopkeepers and clerks and professional men with small incomes, should be driven to do the very thing they detest—driven to borrow money to pay taxes. They are able to pay their way month after month, but to put them in a position of having to borrow in order to pay the tax is a scandal.

I heard a right hon. Member the other day talk about the immense amount of thought that had been given to finding out the square root of minus 1. I suspect that as much thought and trouble has been devoted to finding out what this rearrangement of the two-fourths and three-fourths of this Income Tax will entail. You may twist or turn it about as you like, but you cannot get away from the fact that the man who lives until next July will pay two-fourths; and in the following January he will pay three-fourths:—five-fourths of the tax in six months. Under this arrangement Income Tax payers will be paying five-fourths between the 1st July, 1931, and the 1st January, 1932. You cannot get away from that fact. Why introduce this fresh confusion to harass and tease the taxpayers.

There are only 2,250,000 Income Tax payers, of whom 1,750,000 have assessable incomes of under £10 a week. You are going to tease and harass 1,750,000 of the lees well-to-do of our fellow citizens who are troubled enough already with their own businesses and problems. I believe that the mental worry of the Income Tax annoys them more than the paying of it. The Income Tax is full of pitfalls. The law has made such complications for them to work out that, apart from personal allowances, there are now 100 different kinds of relief which they can claim. So much have alleviations and allowances and uncertainties worried taxpayers that during the past year the appeals to special commissioners have jumped up to 7,500, as against. 1,800 before the War. I do not think that the House realises that while there are 1,750,000 taxpayers whose assessed incomes are not over £10 a week no fewer than 1,500,000 last year claimed return of money and got back £50,000,000 sterling from the Revenue. Think of all the further trouble to which you are putting those people and how you will worry them on top of the injustices of exacting £50,000,000 too much. Now you are going to tease them further and even compel them to borrow by making them pay three-fourths of the Income Tax on the 1st January, 1932. It will be a very oppressive collection to work.

This is how I see the position. Three-fourths of the tax must be paid in January, 1932, and one-fourth in July, 1932. The January, 1932, Income Tax collection is within the current financial year which ends in April, 1932. Consequently reducing the two-fourths balance payable in July, 1932, to one-fourth will not injure the revenue total in this current year. I suppose that the Chancellor of the Exchequer says, "After me the deluge. I do not mind what happens." But what about the resultant shortage of one-fourth when you get to July, 1932, and have only two-fourths due for collection in January, 1933. What is he going to do about the one-fourth shortage during the year April, 1932–33, in which, in July, 1932, two-fourths ought to be secured? Unless expenditure falls very materially or there is an increase in revenue one of two things must happen. During the April, 1932–33, period either taxation must be increased to make up all or part of the £10,000,000 taken in 1931–32, or the Chancellor of the Exchequer will have before him the necessity to take, not three-fourths, but the whole of the Income Tax in one instalment after Christmas, 1932, and leave no fourths to collect in July, 1933. In that case—I have not the slightest doubt that it will happen—the Income Tax payer will be in a very disastrous position if he should have to hear this Government's Budget proposals in April, 1933. The Chancellor of the Exchequer cannot have his cake and eat it. He will have to impose increased taxation or take four-fourths on the 1st January, 1933, in order to make up what he has lost—unless revenue increases or expenditure is reduced so as to fill up the gap—if he is in office.

Why is it necessary to take this £10,000,000 in this manner? It could very easily be got in a very wholesome and proper way, if hon. Gentlemen opposite would face unpleasant facts and seek to amend the admitted abuses of the unemployment dole. There is more than £10,000,000 to be obtained there, if they will only face the position and stop the squandering of money on unforeseen and legal abuses of the dole system. No doubt those who are penalised by this taxation will note the penalty due to the failure of this Government to amend the law in order to stop abuses under the Unemployment Acts. For that reason we ought to do all we can to vote down this proposal and try to defend the smaller taxpayers who will be subjected to penalty quite undeservedly.

Captain CROOKSHANK

I was very glad that my hon. Friend the Member for Leith (Mr. E. Brown) quoted the case of the £5,000 a year man because there is a great hardship there as well as a hardship for the smaller man. The £5,000 a year man was an obvious instance because £5,000 a year represents a Cabinet Minister's salary. I have worked out figures in relation to what will be the difference in the Income Tax in respect of a £5,000 a year salary. I do not want to be invidious. I do not mind whether I choose a Cabinet Minister, married, with one child, or a Cabinet Minister who is single, though I am not certain that there are any of the latter category. I will take the case of the Cabinet Minister with £5,000 a year, married, with one child. At present he pays his Income Tax with the regularity which we should expect from those in high office; promptly to the day—£486 13s. 9d. twice a year. I see that many of them shake their heads. Does that mean that they are not paying it. [An HON. MEMBER: "It is taxed at the source!"] The income of a Cabinet Minister may be taxed at the source, but the income of other individuals is not taxed at the source.

A salary of £5,000 a year is not as much as the Attorney-General gets, so I cannot actually quote the case of the hon. and learned Gentleman, and perhaps it is just as well. As a matter of arithmetic and of fact Cabinet Ministers get £5,000 a year, and other people sometimes manage to achieve that sum by their professional earnings, and the case is, therefore, to that extent, on all fours. The liability under the old basis is £486 13s. 9d. It was paid last January. It is going to be paid this July. Next January comes along and the sum rises to £730 Os. 7d., and then it drops to £243 6s. l1d. In spite of what was said by the hon. Gentleman who spoke from the benches opposite, nothing can detract from the statement that the July and January payments, which come into the Income Tax year period, come to £1,216 14s. 4d., which is a great deal more than £973 7s. 6d., something like £243 more. You cannot get away from the fact that you get a block of 12 months. If you count July 1st, and then January 1st in that year you get a block of 12 months in which five-fourths have been paid. It is a very large sum. Naturally the larger the income, the bigger the sum.

What will happen when the income is less and the Income Tax has to be paid in the ensuing year will, in many cases, be catastrophic. That is a matter which requires really urgent discussion. If you take the six-monthly period going hack to 1928–1929, you have been paying regularly half, half, half, and then you come to this particular year when, instead of going along on your half, half, half, you suddenly go three-quarters and a quarter. There must be two adjacent six months when the change takes place and there is a payment of one-half and three-quarters. That makes five-fourths, and no amount of sophistry from the Government Benches will make any difference to the point of view of the man who has to pay. If it is not so, where will the £10,000,000 come from? That amount must come from somewhere.

Major HILLS

It does not go back.

Captain CROOKSHANK

It does not go back. It must come from somewhere, otherwise what is the point of the Resolution?

Mr. PYBUS

You get it back when you are dead.

Captain CROOKSHANK

One is fortunate if one gets anything back in these days. We are talking theoretically about what the Treasury expects will be a sum of £10,000,000. That means that someone has to be squeezed to pay for it, and that will be a section of the community who will find it most difficult to pay. The people who will have to pay this complicated extra sum are the very people who are supposed to be making profits out of husbandry and farming. The slogan of the Government during the election was: "Farming must be made to pay." That slogan has been changed to: "Farmers must be made to pay"; and that from a Government who have done nothing to make farming pay or to help farmers to be able to pay! It is a most iniquitous proposal. If we are to have this imposition, we suggest that the Amendment which we intend to propose later would give temporary alleviation. It is no good saying that this arrangement will not cost anybody anything. If that is so, it is a waste of time introducing it, putting it into the Budget and saying that we are going to get £10,000,000 out of it.

Mr. BUTLER

I wish to follow the argument with regard to the farming community and deal with the case from the point of view of the small agriculturist. This Budget attacks in every particular the farming interest. The farmer before he has to pay on his Schedule B profit an extra quarter will already have been paying an extra 2d. on his petrol. Then he will be faced in the future with an extra charge in respect of such sites on his land as may have a possible value under the land values taxation proposals. He will find that if he does make a profit he will be obliged to pay an extra quarter at a peculiarly difficult time in farming economics. That is grossly unfair to an industry which the Government have done nothing to help since they have been in power, despite the specific pledges, which they have not fulfilled. Therefore, we on this side of the House say that on this occasion the farming community under Schedule B should be allowed some concession.

I will take two cases. One of a farm which is not likely to make a profit and the other of a farm which is fortunate enough to make a profit in the coming farming year. Take the case of the first farm, which will not make a profit, and which I am afraid is the case of so many farms in the arable areas, as can be seen from the returns to Queen Anne's Bounty in connection with tithe, owing to the incidence of depression in the arable areas. It is unlikely that there will be profits on the arable farms. On what basis had the £10,000,000 been calculated and how much it is expected to get from Schedule B from the profits from farms and farm development. I hope that the Financial Secretary will be able to tell us what forecast has been made as to the sum that is expected from the farming community out of the £10,000,000. In the case of the farms which are not likely to make a profit, have the Government forecast that there will be sums accruing from farms of that kind? The idea that the sum of £10,000,000 will be raised is fictitious, and we are entitled to know what sum is likely to come from such a source.

Let me take the case of a farm that has made a profit in the farming year, perhaps from selling its sugar beet well or perhaps from having stock or sheep or something on which it has made a slight profit. That farm may be a small mixed farm. I know of one instance in England where on such a farm a profit was made last year. There may be other small profits that would come under Schedule B, with no drawbacks. In that case, the farmer will have to meet an extra quarter's payment on his Income Tax in January. He will, therefore, be obliged to realise on his farm produce at a peculiarly difficult moment. Supposing he wishes to realise on the cereal part of his farm and sells some of his cereals. He will be obliged to do that at a certain moment and to thresh out early in January or even earlier in order to be able to pay the extra quarter of Income Tax.

Farming economics are not exactly the same as industrial economics. The only hope that the farmer has is to hold up his product until such time as the market is suitable. If, however, he is obliged to thresh out earlier and to realise on some of his farming produce in January instead of waiting for the proper moment when he could get a better price, he will get a much worse price for his produce. That will make it more difficult for him to pay the requisite amount of Income Tax. Therefore, in the case of a farm which may be paying something under Schedule B, we find that this new provision in the Budget is an extra liability on the farmer. It will mean that those farmers who are making a profit will have to sell at an unpropitious moment for the sale of agricultural produce and that will reduce the possibility of their success in the future. In respect of those farms that are making a profit, this burden will mean that they will be reduced to the same state as those farms that are making no profit.

Some deliciously capitalistic arguments were put forward by the hon. Member for Chesterfield (Mr. Benson), a well-known authority on economics on the Government side. He informed us that this money was really only as much as the interest would be if the people who have to pay on these Schedules were able to keep the extra money instead of paying it earlier in Income Tax. He told us that they could adopt the capitalistic advice which, fortunately, is very little known in ordinary family England, and that is to borrow. From whom are they to borrow? I refer to the farming community in particular. I suppose he will tell us that they can borrow from the banks. Who is to profit? The only people who will profit are the banks. Is this a deliberate attempt on the part of the Government to bolster up the banks and to give them a particular advantage at the present time? Is this the occasion to encourage farmers, who are already in so many cases so deeply in debt, to borrow further from the banks in order to meet liabilities in the shape of Income Tax, if they are capable of doing so?

If there are any farmers who have managed in the present depression to carry on without assistance from the banks or from merchants, they will have to resort to what in farming economics is always deplorable, and that is, they will have to borrow. I have always understood that one of the objects of legislation nowadays was to stop farmers from becoming too deeply indebted. The present position of indebtedness is like one of our thick-grown hedges. It is so thick and has so many roots and ramifications that it will be hard to see that there will be a future for farming unless something desperate is done to cut it. This new provision of the Chancellor of the Exchequer will only further muddle that thick-set hedge and keep light, air and sun from the fields which ought to produce our crops. I hope that the Financial Secretary will say how much he expects to get from farming profits under Schedule B, and having given us that calculation, I hope he will give us some small allowance in the farming districts to meet what will be a crushing burden on such farms as will probably show a small profit.

Mr. BROAD

I have listened very carefully to the Debate and I have noticed that hon. Members opposite are very much concerned about the difficulties that will be experienced by those who will have to borrow to pay their Income Tax. The whole assumption seems to be that the Income Tax payers who will have to pay an additional quarter of their Income Tax earlier, will be paying their Income Tax in advance of the receipt of their income. That is not the case. The hon. Member for Leith (Mr. E. Brown) gave the illustration of a Minister who is receiving £5,000 this year and who may receive only £400 next year. He said that although he would be receiving only £400, he would have to pay Income Tax on £5,000. Surely, wisdom would dictate to the Minister as a sensible person that in the year in which he received his income he should make reserves for meeting the Income Tax when called upon. If he does not do so, he is very unwise. All that he will lose by paying the extra Income Tax some months earlier, will be the amount of interest that the bank might allow him for that period.

I am in the unfortunate position that I do not pay Income Tax. My income is so small and my liabilities so great that I do not pay Income Tax. If I received from some source an income this year of £1,000, I should not pay Income Tax on that this year. It would be next year that I should pay the Income Tax on this year's income. Therefore, I should be given credit by the State for an Income Tax due from me on this year's income but which I had not to pay until next year. It is absurd for the hon. Member for Leith to talk about the poor fellow who is cut down from £5,000 to £400 a year and has to pay on the larger income in the year when he is receiving the smaller income. In the following year he will pay Income Tax on the £400, so that no wrong is being done, as the hon. Member seems to suggest. It is the duty of those who pay Income Tax to save sufficient from their income in the year in which they receive the income in order to pay their Income Tax. If a person this year receives £50,000 and next year receives nothing, it is no use his coming and saying: "This year I have no income. Therefore it is unfair to ask me to pay Income Tax on last year's income." A great deal of confusion has been attempted to be raised in regard to what is a very small disability to the individual who, instead of having his money in the bank, has to pay it a little earlier to the Income Tax collector than he would have done otherwise.

Major LLEWELLIN

I cannot quite follow the arguments of the hon. Member for Edmonton (Mr. Broad). This provision affects everybody who pays Income Tax, however low his income may be. According to the hon. Member, everyone has a bank account on which he merely has to draw and the whole thing is all right. To the man who has a large credit at his bank and has merely to pay out a little more in January and a little less in July, this alteration means nothing.

Mr. THORNE

Hear, hear!

5.0 p.m.

Major LLEWELLIN

If the hon. Member who interrupts me is in that position, I congratulate him. This alteration affects every professional man, every trader, and every farmer, and there are very large numbers of them who will find it very difficult to put their hands upon the money for the extra instalment next January. January is one of the worst times of the year to ask for this extra sum. Some hon. Members have already talked about Christmastide and the extra expenses that come on the father of a family —I am not one myself—at that period of the year. It is quite clear also that at that time of the year on the small man comes a quarter's rent, usually an insurance premium. There comes almost certainly, if the man is of such a standing that he owns a car, the whole of his car tax for the year. There comes also if, as is probable, he so arranges his insurance that he gets his insurance certificate under the new Road Traffic Act contemporaneously with his licence, the whole of the car insurance premium. Now he has this extra burden upon the top of all those other burdens which are payable on 1st January every year. It seems to me that this is the very worst time of the year upon which to place this extra burden on this ordinary small professional man who has worked hard for his profit, and who is suddenly called upon at that time of the year to pay a very much larger part in Income Tax.

The hon. Member for Chesterfield (Mr. Benson) seems to make out that all he would lose would be the amount of interest that he otherwise might get on this sum for six months, but the great difficulty is that the man probably has not the money. He has got to go and borrow from somebody, and that is very difficult. The man who is charged for Schedule A must have some land or some security upon which the bank would ordinarily lend him money, but the small trader or the professional man very likely has no means of getting this accommodation from his bank, and he will have to sell part of his household goods in order to pay this extra instalment if the Treasury are going to insist that everybody pays it promptly on 1st January. If they are not going to insist on that, then the whole of the matter under discussion falls to the ground, and the whole point of ante-dating this payment falls with it.

I object to this proposal, first of all on the ground that this burden will be placed on professional men, traders and farmers up and down the country at the very worst time of the year. But I object to it on another ground as well, because this, of course, is merely financial juggling. It is obvious that under this for the next financial year there will only be a quarter to come in July and unless, some ante-dating is made again for the other payment, you will get only your half on 1st January, and so, naturally, only three-quarters of the tax will be obtained in the next financial year. [Interruption.] I am obliged to the hon. Member. I was wrong in that, and the hon. Member reminds me that there will still be the extra three-quarters on the next 1st January, so that there will be a full year's tax. But this means that a man will have paid actually one quarter of the tax in advance for the whole of the year, not only for the six months for which the hon. Member for Chesterfield calculated interest. The man will be paying six months earlier for life; for the whole of his life this interest will be ante-dated at this period.

I object to this proposal also, because it is quite clear that if you get this financial manoeuvring with a tax like this Chancellors of the Exchequers will be tempted to do this. They will be tempted, for instance, if they are contemplating an election at the beginning of July of one year to say, "No, we will now put hack the whole quarter until the next January," so that there will be no Income Tax demand just on the eve of a General Election. If you start wangling with the changing of the dates in this manner, you may get that sort of thing done, and that would be the worst way of dealing with the nation's finances. I am sorry that the Chancellor of the Exchequer has decided, in order to balance his Budget, to come down on this small class of hardworking people in this country for an extra instalment this year. He gets from that one particular class which he has chosen, this extra £10,000,000, and I hope the date will be altered before we finish this discussion this afternoon. I should like to see this idea dropped altogether, because I think it will fall very hardly on all who belong to this class.

Sir ALFRED LAW

While I was not at all surprised at the method which the Chancellor of the Exchequer has adopted by the payment of this instalment of three-quarters of the tax, yet I am very much surprised at his taking Schedules E, D and B. It has been quite properly pointed out that his predecessor adopted the same system in regard to Schedule A, but that only makes this proposal all the more daring and inconsistent. I suggest that the payment of Schedule E falls harder on those particular taxpayers, because it may be, and it very likely will be, very hard for them to pay three-quarters of the year's Income Tax on 1st January, even if in the following July they are only called upon to pay one-quarter. This proposal means that five-fourths are paid in one year. That is true in the sense that next July there will be the ordinary half of the taxes to pay and the following January there will be three-quarters. Therefore, there will be five-fourths in one year and in the following year matters will right themselves. What I complain about is that the right hon. Gentleman should have chosen Schedules E and B. Those are two Schedules on which people will find it most difficult to pay. This is not a part of the Budget which should take up a very large amount of controversy, but the proposal of my hon. Friend to adopt seven-twelfths instead of three-quarters is a perfectly fair proposal. It meets the Chancellor of the Exchequer half-way. I hope that the Chancellor of the Exchequer will see his way to adopt this method. It will make it a little easier for payments on Schedule E if a man pays on seven-twelfths instead of three-quarters. Therefore, I hope that an alteration will be made in this part of the Budget.

Mr. GRAY

I do not propose to detain the House for more than a very few minutes in dealing with what is really an exceedingly simple, although apparently a very complicated, subject. It seems most remarkable that there should be any difference of opinion on the simple method of accounting as to whether under this proposal the taxpayer is really being asked to pay an extra Income Tax of 1s. l½d. in the £, or whether he is merely being asked to make payment six months sooner, in which case it is not an increase of 1s. 1½d. in the £, but only whatever extra cost may arise from having to find the money sooner. It is extraordinary that there should be any dispute as to the facts of the case. I think the fallacy arises from Members of the Committee attempting to adjust their own budgets on the same principle as that on which the nation balances its Budget. The nation makes its Budget purely on a cash basis. It takes no account of money owing to it or of money which it owes. It simply considers how much money it has collected and how much money it has paid. I am sure that no private individual balances his budget on that principle. Whenever he strikes a balance sheet, he takes into consideration the amount of money he owes, whether it be to the tradespeople whose accounts he has delayed to pay—a matter of extreme difficulty to a great many tradespeople in this country and one reason why they are rather slow sometimes in paying their Income Tax—or to other people.

But if we take into account the money we owe the position is clear. We are assessed for payment of Income Tax on the amount of the previous year, but this is an assessment of Income Tax for the current year and it is payable in two instalments, the first half falling due on 1st January and the second half in July. The position of the ordinary taxpayer on March 31st is that he has paid half the tax that he owes by that date and he still owes another half which he pays in July. Under the principle now to be adopted by the Chancellor of the Exchequer, at the end of March he will have paid three-quarters of his Income Tax for the year, and he will owe only one quarter, and if he takes into account the fact that the money he owes and whatever may happen to him, whether he dies soon or late, he will have to adjust this, or his executors will be liable to the Revenue for the amount of the tax on his income up to the date of his death, and his position will simply be that the amount he owes must be taken into account, if you are to get a clear idea of what you are doing under this suggestion.

The biggest objection to this proposal is plainly that it is using up one of the unseen reserves which we rather criticised the late Chancellor of the Exchequer for doing in the period of the last Government. During the period of that Government the late Chancellor of the Exchequer used up every available unseen reserve. The present Chancellor of the Exchquer is doing exactly the same thing in this Budget as regards £30,000,000 of the amount he has to collect. He has admitted that he did it with considerable reluctance, that he did it purely in the great national emergency in which we are placed. We have heard a great deal about the hardship of the individual taxpayer under these conditions. My hon. Friend the Member for Leith (Mr. E. Brown) did point out what may be a very considerable hardship, and I think it would be worth while for the President of the Board of Trade, or the Financial Secretary to the Treasury, or the Chancellor of the Exchequer to consider the case of the man whose income has fallen very considerably and who may really be incommoded by the fact that he has to pay on 1st January an instalment of three-quarters.

While the House has been sitting I have been interested in working out two illustrations. Take an unmarried man with £500 a year, with no liability and who does not insure his life. That is the man who has the maximum amount of Income Tax to pay on £500 a year. I find that actually he is liable to a tax of £31 12s. He will be called upon to pay an increased amount in January of £7 8s. Instead of having to pay £15 16s., he will pay £23 4s. I do not think a man with £500 a year and no commitments at all ought to find any great difficulty in finding an extra £7 at any period of the year. If he has a wife and family and has insured his life, the amount, of course, will be much less. Take a man with £1,200 a year. The amount he will have to pay will be £43 5s., or £10 16s. 3d. extra. I suggest that a man with £1,200 a year, that is £100 a month, should be able to find £10 16s. 3d. extra at any period of the year without any great hardship, and I cannot be induced to work up any great sympathy for the man with over £1,200 a year who says that he cannot find his Income Tax in any proportion or at any time which may be most convenient to the State to collect.

The object of this Budget is to meet an emergency. What is troubling many of us is not so much the present year as what is going to happen in the following year when we shall not have these extra sources of revenue available. We shall have to meet the next Budget under the same conditions as we have to meet the present Budget. Without any improvement in trade and industry, indeed, without any further depreciation in trade and industry, without any increase in expenditure, we shall have to meet a situation in which we shall have to find £30,000,000 of new taxation in order to balance the Budget. I am not sounding any alarmist note as to the ability of the country to meet its obligations, but I suggest that the question we are now discussing is a perfectly trivial matter as compared with the greater financial issues we shall have to face next year. If hon. Members will examine individual cases they will find that they are forced to this conclusion, either that the amount involved is only a few pounds or that you are dealing with a man whose income is so large that he should have sufficient financial resources to meet the requests of the State in this emergency.

The PRESIDENT of the BOARD of TRADE (Mr. William Graham)

One of the disadvantages, if it is a disadvantage, of our financial Debates is that we cannot reply on every occasion to the various subjects which are raised in the programme of the Chancellor of the Exchequer. During the introductory speeches on the Budget reference was made to this subject, and I will endeavour to reply as briefly and as clearly as I can to the points which hon. Members have brought forward. It is worth while recalling a little of the history of this matter, because it will throw a light on many of the questions which have been asked, and will be, I think, up to a point a fairly good reply. In olden times, up to about 1860, an arrangement was in force for the payment of Income Tax on a quarterly basis, and in that year Mr. Gladstone, in making certain changes, brought five-fourths within the financial year. Later on, in 1869, Income Tax payment was placed on the basis which remained in force right up to 1915, that is, the collection in one sum on 1st January.

Sir BASIL PETO

Does not the right hon. Gentleman mean 1918?

Mr. GRAHAM

No, 1915. In that year, under Schedules B, D and E, certain changes were made by which one-half of the tax was payable in January and one-half in July, and then in the Finance Act, 1918, Schedule A was brought into this two instalment plan. It is a comparatively accurate picture to say that we then completed, by Section 157 of the Income Tax Act of 1918, where there is a reference to Schedules A, B, D and E, and put the collection on the basis of one-half of the tax in January and another half in the July following. That remained the position until the change made by the right hon. Member for Epping (Mr. Churchill) in 1927, when he accelerated the collection of Schedule A payments, that is, the Property Tax, taking the whole amount in one payment in January of each year. Therefore, the change we are making now is really an amendment on comprehensive lines of that Section of the Act of 1918. Payments under Schedules B, D and E are now to be brought forward, not to the extent they were in 1927 in regard to Schedule A, but to the extent of three-quarters in January of each year leaving one-quarter to be paid in the subsequent July. That is within narrow limits an accurate summary of the present situation. The House will observe that it is a partial withdrawal of a concession which has been in force as regards some of these classes of taxpayer from 1915 and as regards all of them from 1918, except as modified by the Act of 1927.

May I turn to the suggestions which have been made this afternoon with regard to the hardship that is involved by this proposal. It is perfectly fair to remind the House that we are in a year of exceptional financial strain, and the Chancellor of the Exchequer did not disguise the fact that he does not like devices of this kind. It is plain that a step taken in this emergency to secure a contribution of £10,000,000 towards a deficit of £37,500,000, is part of the programme designed to make the minimum change in existing industrial conditions. That is really what is before the House, and if the Amendment is carried it will mean that instead of having that three-quarters in January we shall only get seven-twelfths, which will reduce the receipts of the Exchequer to £3,500,000, leaving us with a deficit of £6,500,000 under this head. So delicately is the Budget balanced that no proposition of that kind can be tolerated for a single moment, and I do not imagine that hon. Members opposite believe that the Amendment should be carried. It is put down, I have no doubt, largely for the purpose of discussing the position.

Let me turn to some considerations which, I think, can be put in reply. After all, if in a time of financial emergency devices of this kind are necessary we must put them in proper proportion. No one disputes the fact that it affects a considerable section of taxpayers in the country, but the preceding Chancellor of the Exchequer concentrated upon Schedule A, and he estimated for a gain in the accelerated payment" of £15,000,000. In point of fact, the yield was nearly £17,000,000, and over a rather wider field my right hon. Friend, in circumstances which have become much more serious than they were in 1927, is only asking for £10,000,000. That is a perfectly fair point to put in this connection.

The right hon. Member for Edgbaston (Mr. Chamberlain), at an earlier stage in our Debates, argued that a special class had been singled out whose voting strength was small, and he seemed to argue that a special injustice was involved as far as they were concerned. I indicated earlier in our proceedings that that argument must be applied to this extent, that a considerable number of people were affected by the change in 1927, and more particularly the large numbers of small owner occupiers of property, whose numbers have been greatly increased by the work of building societies and similar organisations within recent years. But another part of the reply is undoubtedly this, that hon. Members make far too much of the standard rate and forget that the thing which really counts with the great majority of our taxpayers is the effective rate, that is, the rate they pay after the allowances have been accorded owing to changes made in recent years. Looking back over the report of the Royal Commission in 1919 I am bound to say that considerable advantages have been given. Taking the year 1915 and comparing it with the present day, a single man in the enjoyment of £500 a year will now pay less Income Tax than he was paying then, and a married man in receipt of £800 a year also pays less. A married man with three children with an income of £1,200 or £1,400 will be in a better position as regards the aggregate amount of the tax he has to pay than he was in 1915.

Sir ASSHETON POWNALL

Was the rate 4s. 6d. in the £ then?

Mr. GRAHAM

The rate was 3s. in the £. The change as regards the property tax in 1918 was due to the fact that it had risen to 6s. in the £ owing to war circumstances, which meant that special burdens were involved. It can hardly be suggested that there has been any real hardship in withdrawing part of the concession which was given in 1915, only half of it, and leaving one-fourth to be paid in July, especially when it is fair to suggest that the alternative might have been an increase in the standard rate.

One or two other questions have been raised. I have been asked what part of this additional burden would fall upon the cultivator of land. It is very difficult to disentangle in these different Schedules the precise amounts which are raised, but I believe that on a very round figure—and the House will understand that it is only a round figure—the extra charge might be about £250,000. In that connection, however, the House will remember, more especially when we are dealing with a charge that nothing has been done for agriculture, that very considerable concessions in tasxation have been given to the agricultural community Agricultural land is to-day, with the exception of dwelling-houses, derated and for a long period the farmer has been assessed for Income Tax on the basis of the annual value of his farm, and if he considers that he is placed at a disadvantage by that basis he can exercise the option to be assessed on the actual profit which he has earned. In any case taking the great bulk of agricultural holdings, more particularly the smaller holdings, I am advised that only very small additional sums will have to be found under this head as a result of the accelerated collection. Very much the same thing is true of a great number of the other taxpayers affected, and if that be admitted I cannot conceive that even as regards those who have to find the larger sums any real case of hardship can be proved.

I dislike a great deal the argument—I do not charge hon. Members particularly with having used it this afternoon—that there is some hardship in having to meet obvious obligations to the State. In far too much of our public argument at the present time the State is always placed in the position of the creditor to be paid last. Why should that be? This is a tax which is due after the income has been earned, and as a matter of fact it was for a long period payable on 1st January of each year. Only part of the concession which has since been made in that respect is now being withdrawn, and there is no mathematical or other reason for saying that the amount of the burden on these people is increased because three quarters is collected within the present financial year and one quarter is passed on to July, and, assuming that there is no change, three quarters in the January of the succeeding year. Of course it is beyond all dispute that an additional sum will be collected from those taxpayers within this financial year, but that is the whole object of the change. The change is being made in order to secure an additional £10,000,000 by the partial withdrawal of a concession within this financial year. That sum the State is definitely and openly taking.

Sir H. O'NEILL

And the taxpayer will not get it back next year.

Mr. GRAHAM

I think that much of the confusion which exists in reference to this subject arises from the fact that hon. Members have allowed their arguments to trickle over from one financial year into another. The financial arrangements of the succeeding year are dependent on the Budget of that year. I am dealing with the situation at the present time. For all the reasons which I have mentioned and many other reasons which could be advanced I think that this change is justified under exist- ing conditions. It is certainly preferable to any increase in the standard rate, and accordingly I must ask the House to reject the Amendment.

Major ELLIOT

I am sure that we must all have felt the greatest sympathy with the President of the Board of Trade in the obviously lame and impotent explanation which he has found it necessary to give to the House, and all the more so because he was forced to throw over several of his own supporters—some of whom by speech, and some of whom by applause were attempting to justify the flimsy thesis that the only burden which the Income Tax payer was called upon to bear as a result of this proposal was the 1d. in the £ which he would have to pay to his bank for accommodation. I intended to deal with the fantastic speech of the hon. Member for Chesterfield (Mr. Benson) but his argument was blown into smithereens by the President of the Board of Trade and it is unnecessary to descant upon it, save to say this: Upon looking up that valuable publication "Dod's Parliamentary Companion," I find that the hon. Member was for many years treasurer of the Independent Labour Party. [HON. MEMBERS: "His father!"] I am corrected and I apologise to the hon. Member for my mistake. I can only say that he must have inherited a certain airiness of manner in regard to financial matters, and, no doubt, he has not yet learned everything in his present position or it would have been unnecessary for the President of the Board of Trade to rise to-day to explain away the speech of a Parliamentary Private Secretary, which is always a very trying thing for a Minister to have to do.

The President of the Board of Trade made an appeal ad misericordiam. He said that this Budget was so delicately balanced that a puff of wind would blow it over to one side or the other. He said we were asking him to do something which he would have liked to do and for which there was a great deal to be said but with the finances of this Budget to deal with, with the very exceptional strain of an unusual emergency, who could be so unkind as to comment adversely upon the work of his right hon. Friend the Chancellor of the Exchequer? But what of the phrases with which the present Chancellor of the Exchequer, when he was in Opposition, greeted the arguments and calculations of the right hon. Gentleman the Member for Epping (Mr. Churchill) when that right hon. Gentleman came before the House in a year of real financial strain, with a real emergency to deal with, with great Estimates suddenly thrust upon him? Were they such phrases as the President of the Board of Trade has just indicated? Not at all. The present Chancellor of the Exchequer and indeed the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) went into the woods and the forests to find metaphors with which to denounce the "reckless and profligate" proposals of the right hon. Gentleman the Member for Epping. "Jugglery and deceit" were the words of the present Chancellor of the Exchequer on that occasion. They are harsh words and I do not apply them to the President of the Board of Trade. Jugglery perhaps, but deceit, no! Just a little juggling, tossing up three balls and watching them come down again, rubbing the hands twice, and saying "now you see it and now you do not "—and the deficit for the year is gone!

The right hon. Gentleman the Member for Carnarvon Boroughs, who is an ex-Chancellor of the Exchequer dealt, in 1927, with many of the points which have been raised to-day by the President of the Board of Trade. We say that this is a tax upon a special class. "Not at all," says the President of the Board of Trade. "Yes it is," says the right hon. Gentleman the Member for Carnarvon Boroughs and "it is no use the Chancellor of the Exchequer dismissing it as a good joke." That was in 1927, hut how does that compare with the words of the hon. Member for Mid Bedford (Mr. Milner Gray) in his contribution of this afternoon. That this is an increase of 50 per cent. upon the Income Tax, paid by a certain class of people for one year—that was the statement of the right hon. Gentleman the Member for Carnarvon Boroughs speaking with the full authority and responsibility of a former Chancellor of the Exchequer. He said: It is an extra tax imposed for one year upon one class and a very much heavier one, and hon. Members will find that when they go to their constituents."—[OFFICIAL REPORT, 13th April, 1927; col. 408, Vol. 205.] I should have much pleasure in going to the constituents of the hon. Member for Mid Bedford and pointing out that this imposition, which the right hon. Gentleman regarded as a serious imposition, is, to the hon. Member, a mere triviality, involving a sum which anybody should reasonably be expected to find on any occasion. I come to the next point of accusation against the defence raised by the President of the Board of Trade. He says that this is merely an amendment of the law and, as far as I can make out, it is only an instalment. He said that the whole of the concession had been withdrawn in the case of Schedule A, but that it had not all been withdrawn in the cases of Schedules B, D and E—not yet. But if the rake's progress of the present Government is to continue, it is clear that the arguments which the President of the Board of Trade and the Chancellor of the Exchequer have devoted to justifying the exaction of this extra quarter, can also be devoted to justifying the exaction of another quarter. That is a very serious argument for the Income Tax payers who come under those three Schedules. The present Chancellor of the Exchequer when examining the proposals of the ex-Chancellor of the Exchequer in 1927, when he got away from the flowers of his oratory such as the references to "jugglery and deceit" and to "profligacy and bankruptcy," and to "the friend of the rich man," and the ordinary small change of his conversation, of which we do not complain, and when he came down to the serious discussion of the matter, said in reference to the 1927 proposal: From the manner in which that has been received in some quarters one would imagine that this sum was a windfall; that it was something that was coming from nowhere and that nobody was going to provide it. But it comes to this: that those who pay Income Tax under Schedule A will pay three times in 12 months instead of twice."—[OFFICIAL REPORT, 12th April, 1927; col. 237, Vol. 205.] Does not the same remark apply precisely to the proposal which is now made by the Government? What are the sums which the hon. Member for Mid Bedford suggests are trivial sums, which any man ought to have at his bank? Those sums are very considerable. Incidentally, I am glad to see the hon. Member for Chesterfield in his place. May I apologise to him for having attributed to him an office which I understand was held by his father?

Mr. BENSON

I have been treasurer.

Major ELLIOT

Then I have been misled. I made a reference to the hon. Member in connection with the finances of the Independent Labour party and I stood corrected by those who have a much closer personal acquaintance with the hon. Member than I have. Now it appears that I was right, and I can now understand the contempt with which the Chancellor of the Exchequer dismisses his ancient colleagues of the Independent Labour party, because the Chancellor of the Exchequer understands arithmetic and errors in arithmetic rouse him to a fury, to which most of us can only be roused by some of the grosser sins of debauchery or profligacy. Our argument is that this is not merely a forestalment of Income Tax, but that in this present year a heavy additional burden is being laid on the taxpayer. One cannot get away from that argument by saying that it is merely a temporary burden. It is a permanent burden. It is an increase in this year not remitted in any subsequent year.

What are the sums involved? Take a man with £700 a year. Whereas, under the old budgetary arrangements, he would be liable for £17 18s. in January and £17 18s. in July, or a total of £35 16s., this year, he will be liable to £17 18s. in July and £26 17s. in January, or a total of £44 15s. That is the case of a married man with one child. The single man who was previously liable for two instalments of £34 16s. each, or a total of £69 12s., is now liable to pay £87 within the current year, which is a very considerable increase. It is not enough to say, as the hon. Member for Mid Bedford said in an airy way, that such a man has no responsibilities. Many of such people are maintaining households, maintaining parents or other relations, and in many cases professional people with comparatively small incomes, have very serious burdens laid upon them in that way. In such cases, the whole weight will fall upon the actual wage earner or income maker—the supporter of the home—whoever he or she may be.

Often the liability runs through a considerable number of people. The man with £1,200 a year paid £129 12s. 6d. under the old basis as a married man with one child, and he will pay £152 this year. A single man who had to pay £163 17s. 6d. in the year, will now have to pay £204 4s. 3d. These are very considerable increases. The man with £2,500 a year who was finding £435 17s. 6d., including his Surtax liability, has now to find £538 l1s. 10d. As a single person, he previously found £469 12s. 6d., and he now has to find £580 15s. 7d. It is clear from these figures that, as the Chancellor of the Exchequer said when he comes to curse and not to bless proposals like this, this money does not fall from the heavens; it has to be found by someone and from somewhere. The man with £5,000 a year found before, if he were a married man with one child, £1,279 4s. 6d. in a year, and he has now to find £1,522.

Who are the people who have to find this money? It is not enough to say that no sympathy is needed for a man with £5,000 a year or for a man with £2,500 a year or with £1,200 a year. These men are more particularly professional and other business men, many of whom are really living upon their own capital, which is their health and strength. Take the people with whose works we are acquainted; take the great correspondents of the newspapers and the pressmen of Fleet Street; take the Gallery men of this very House. They earn considerable sums, but they cannot go on for ever earning these sums. Take the case of the doctor going on year after year with a large panel practice. He earns a considerable sum, but he cannot go on for ever. It was for this reason that these proposals were not put forward by the right hon. Gentleman the Member for Epping. They will fall hardly upon the professional man; on the barrister with a heavy practice, working long hours night and day and very often breaking down under it; on the panel doctor working long hours, and looking forward at a relatively early date to get away from the heavy hammer of an industrial practice, and to get into some country practice where his income will be very much less, but where his health may be expected to last out a good deal longer.

The hon. and gallant Gentleman the Member for East Rhondda (Lieut.-Colonel Watts-Morgan) will be acquainted with the strain under which a panel doctor in a colliery district works, and under which he often breaks down. He will be the first to agree that these men earn every penny they get. When the question of a reduction in panel fees was being considered, the representatives of the workers very often stood out against any proposal for a reduction. I leave out altogether the small shopkeeper and trader or even the farmer. The President of the Board of Trade said it is not very much for the farmer, and that it was only £250,000 a year. Last night the President of the Board of Trade vehemently attacked a proposal that would relieve farmers of £75,000, and said that it was too large a sum to contemplate. Now that £250,000 is to be taken from the farmers, it is a most reasonable and equitable proposal! The right hon. Gentleman piles Pelion on Ossa by suggesting that the farmer can pay £250,000. Leaving out of account altogether the shopkeepers and traders this tax will hit the typist—[Interruption.] There are many confidential stenographers earning £400 a year. It will hit the small clerk, the small business man, and the type of people whose bad debts are piling up, whose professional earnings are going down, and whose salaries are being reduced. These are the people who have been singled out for this impost—the rentier class against whom the Chancellor of the Exchequer has uttered so many denunciations.

Lieut. - Colonel WATTS - MORGAN

Where would the hon. and gallant Gentleman find £10,000,000 while having regard for the working classes?

Major ELLIOT

I could wriggle out of that like the Chancellor of the Exchequer would do, by saying that it rests with the Economy Committee to tell us how to do it. But I will not do that. The revenue which the Chancellor is throwing away on gloves, wrapping paper, cutlery and other things, and other revenue of the same kind, would balance the Budget without anything of this nature.

Captain CAZALET

The sweet reasonableness of the President of the Board of Trade has on this occasion, as on many others, endeavoured to make us believe that it ought to give us pleasure to do what is obviously a most unpleasant thing. It is only an extra dose of original sin in ourselves that does not make us pay our contributions to the Exchequer with positive joy. The hon. Member for Mid-Bedford (Mr. Gray) gave the impression that it should be a real pleasure for us to pay the various contributions, and the extra severe contributions which the Government are proposing to take in the next 12 months from 1,500,000 people who are among the very hard-pressed members of the community. Yesterday we were discussing a Measure by which we are to have the pleasure of paying extra sums to the Exchequer in two years' time. We were told that it will restore the finances of municipalities and bring prosperity to the countryside. We are now discussing a means by which 1,500,000 people will contribute next year an additional quarter of their Income Tax. If we felt that the additional contributions which the Chancellor is always asking us to pay were to be spent in any constructive Measure, and would find productive work for a single unemployed person, perhaps it would lessen the bitterness with which we pay our contributions.

An hon. Member opposite, who admitted that he did not pay Income Tax, seemed to think that the paying of Income Tax was a very simple affair. According to him, when people receive their salaries or dividends, they simply put on one side just that amount which the Exchequer will want in course of time. In fact, judging from him, these individuals ought to be almost unable to resist sending the money to the Exchequer as soon as they receive it. Of course, when the day comes to pay, there will be no difficulty at all; the money will be in the bank or in the cash box, carefully docketed, and will be sent with pleasure whenever the Exchequer asks for it. As we all well know, things do not happen like that. What happens is that when you receive your salary, you are very glad to get it to meet present current expenditure. Then other things happen; people fall ill, and perhaps some beloved relative, from whom you expect a useful present, does not come up to expectations. You go cheerily along, and suddenly you get a form and realise that you have to contribute to the expenses of the State by a certain date. You find that there is not much in the cash box, and still less perhaps in the bank, and the question arise" whom you should pay, whether it should be the butcher, the baker, or the Exchequer. According to the President of the Board of Trade, we should regard all payments to the State as though it were a privilege to pay them.

I am certain that the very large majority of these people will be unable to pay their contributions next January. It is all very well to say that £10 or £20 is not very much, but it depends on the state of your finances. There may be moments when it is difficult for anyone to find £5. Dividends, salaries and every other form of income are on the downward trend, and in nine cases out of 10 people will receive next year less than they have received this year. But the Government says, "You are going to receive less, and we are going to charge you a little more on the basis of last year." I am certain a large number of people will be unable to produce in January the sum that is required, and that the Chancellor will be disappointed with the result of this piece of financial jugglery. If the 1,500,000 people who are to pay this extra burden felt that the money would be properly used, they might make some extra attempt to pay it. Because we believe that it will be extravagantly thrown away and dissipated by an extravagant Government, we are particularly grieved that we have to bear this extra burden.

6.0 p.m.

Major DAVIES

When hon. Members on this side protest because increases of direct taxation are made, we are told that we are trying to bolster up the rentier class. On this occasion we are voicing the interests of a section of the community which is a much wider section than was appreciated by the Chancellor of the Exchequer when he brought in this proposition. We have listened to some fatherly advice from the hon. Member for Edmonton (Mr. Broad), who seemed to think that whenever anyone received remuneration, from whatever source it came, he deliberately put by for that unfortunate and rainy day when the demands of the Exchequer came in. I wish to emphasise that this demand will fall upon people at a particularly unfortunate time. Though people are taxed on the previous year's income, they actually pay the tax out of the income of the current year, and all those who are not so fortunate as to have so large a banking account that a few thousand pounds more or less in taxation is a matter of no moment, and who have to cut their coat according to the cloth, and, as the Chancellor of the Exchequer is doing in this Budget, make no allowance for emergencies, will find their private and domestic arrangements upset. Any unforeseen sickness or any extra expense that crops up will upset their best-laid calculations. Not only are many people suffering from reduced incomes, but they are suffering great anxiety as to whether they can maintain the positions they already have. It is all very well to talk of making arrangements to pay, such as those suggested by the hon. Member for Edmonton, but if a man has not got a job he cannot put aside a portion of his income, and therefore this demand will hit a substantial portion of the community who find themselves in a particularly exposed position.

The case of the farming community has already been touched upon, but I wish to draw attention to another aspect of it which has not yet been mentioned. The time of year when this extra impost will fall upon the farmer is a particularly unfortunate one. January is a month of outgoings and not of incomings. It is the leanest time of the year. It is the time when produce realises its lowest, and when the bills for seeds and fertilisers begin to come in. Mention has been made of Schedule B, but I would remind the President of the Board of Trade that in many instances the farmer pays the landlord's tax under Schedule A and does not recover that sum until the time comes for him to pay his rent. It is the farmer who will have to find the cash in January for what is an extra windfall from the point of view of the Chancellor of the Exchequer, though an additional burden on the farmer. Let it be granted that there is an emergency. Judging from the taunts from the benches opposite, hon. Members there would like us to suggest how the money could be provided otherwise. It is not for us to make suggestions, nor would it be in order for us to—

Lieut.-Colonel WATTS-MORGAN

I do not know whether the hon. and gallant Member is alluding to me, but I did not taunt anybody at all. I had heard some suggestions from the benches opposite as to how the need for raising the money in this way could be avoided, and I thought the hon. and gallant Member for Kelvingrove (Major Elliot), being so eloquent, might tell us definitely where the money could be found.

Major DAVIES

Perhaps the hon. and gallant Member misunderstood my use of the word "taunt." We have heard the observation, "What would you do?" Over a cigarette, sometime, I have thought that there might have been another way, disagreeable as it would be, of producing this money, but I do not want to develop that theme. However we juggle with the facts, as the hon. Member for Chesterfield (Mr. Benson) said, this is an extra burden of direct taxation on a substantial portion of the community, and a portion which is particularly defenceless and finds it difficult to raise money. Although the Chancellor of the Exchequer is saying that this is only a sum of £10,000,000, spread over 40,000,000 people, it is a burden which will fall with more intensity than is realised upon small shopkeepers, people in clerical positions, farmers and the professional classes, people who obtain every penny of their income by hard work; it will not affect alone those who are described as "coupon cutters." I think this method of raising the wind on this occasion is a subterfuge, an unwise subterfuge, an unfair subterfuge and a mean subterfuge.

Lord ERSKINE

I wish to make a few remarks on behalf of the 1,500,000 unfortunate people who come under this particular part of the Budget. They are a large class, and a class who are particularly hard hit nowadays. They are mainly the small people, and I am interested to note that though we are discussing a subject which very closely affects small people not a single Member of the Liberal party is present. I had thought that that party always claimed that it was the main support of the cause of the small men, and I feel that they might have shown more interest in the Debate to-day.

Lieut. - Colonel WATTS - MORGAN

They have a party meeting.

Lord ERSKINE

I represent a seaside town. Seaside towns have experienced very hard times in the past few years, and last year was probably the worst that many of them have ever known. All the small people there who own shops are to be called upon to pay this extra imposition, and to pay it at a time which is a most unfortunate one from their point of view. They will be very hard hit. Exactly the same argument applies to the farming community. There are a great many smallholders and people who own their farms in the neighbourhood of Weston-super-Mare. They have been exceedingly hard hit, but they too will be called upon to pay an imposition which it will be very hard for them to meet. After the remarks of the Chancellor of the Exchequer in April of last year, and his striving after financial rectitude, I never thought he would ever descend to a proposal of this type. If during the last Parliament any of us had told him that one day he would be standing at that Box and submitting to the House such a proposition as this, he would have denied it with all his might. So far from laying this imposition on people able to bear it in the way that many people who pay Income Tax under Schedule A can bear it he has, as the right hon. Member for Edgbaston (Mr. Chamberlain) said, placed it upon the people who find it least easy to pay.

The President of the Board of Trade seemed to believe that this tax could be easily paid by the people upon whom it is laid. He said it was only a little one, but, after all the £10,000,000 has to be found from somewhere. I was surprised to hear him say that de-rating had been such a good thing for the farming community. During the long Debates on that subject we were told by hon. Members opposite that if we de-rated land all that would happen would be that the money would go into the pockets of the landlords. To-day, apparently, the Government have changed their tune. Now that they are called upon to defend a proposal of this type the President of the Board of Trade says that de-rating was a good thing. Then we have had a speech from the hon. Member for Mid-Bedford (Mr. Gray), who seems to think that people can always find any amount of money at any time. The hon. Member may be able to do so, but very few of us are capable of it. Many of his constituents who suffer under this impost will think he has a very odd idea of how to represent their interests.

As I have said, the £10,000,000 has to come from somewhere, and in these hard times the people who have to find it will be involved in a good deal of hardship. I am sorry the President of the Board of Trade was unable to accept the Amendment we have put down. The arguments from the Government side against it were not convincing. We were met with the taunt, Where else would you find the money? The hon. and gallant Member for Kelvingrove (Major Elliot) gave a very good answer to that inquiry. When these Debates are read, and the people realise from whom the Government are taking the money this action on the part of the Government, like most of their other proceedings, will have a very detrimental effect upon their electoral prospects.

Captain Sir WILLIAM BRASS

I should like to examine in detail the sources from which this advance of money will be taken. We have been told that it will be taken under Schedules D, E and B. Under Schedule D we are expecting to get this advance of Income Tax from the mining industry, from the transport industry, from profits on businesses, professions and so on. If we consider the position of the mining industry after the effects of the quota system it will be realised, surely, that they must have difficulties in raising this additional portion of Income Tax. The transport companies have to pay an increased duty of 2d. a gallon on petrol, which quite obviously will hit them very hard, yet they, too, will find a great deal of difficulty in paying the Income Tax earlier than usual. We have heard already of the difficulties of the occupiers of land, and another large class who are going to suffer are those who pay under Schedule E, including all salaried officials. The right hon. Gentleman told us in his speech just now that the Budget was delicately balanced. If he looked at some of the budgets of the wage earners and people like permanent officials he would find that their budgets also are very delicately balanced at the present time. I think they balance very often on the wrong side.

It is particularly hard to bring in this advance of the Income Tax at the present time. We have been told that this is purely an emergency measure. That may be so or it may not. The excuse which the right hon. Gentleman the Member for Epping (Mr. Churchill) had for adopting the course taken by the Chancellor of the Exchequer was the General Strike, and that was a real emergency. We are now dealing with an ordinary period. Certainly things are bad enough, but I do not think that this year is any more of an emergency than next year is likely to be. This is a very difficult time for all wage-earners, officials, and people with small salaries. It is extremely difficult for them, because they have been going through a very difficult period, and at the end of the year they have to pay various things, such as tailors' and doctors' bills, and insurance of motor cars. At this time of the year we have to pay our licence duties, and very often at the beginning of the year it is the custom to pay life insurance premiums and that sort of thing. Let us imagine one of the wage-earners balancing his budget for this year. Very often he is a person who does not read the newspapers and does not know what has happened in Parliament. Suddenly this wage-earner will find himself next year, not with a demand note for half his Income Tax, but with a demand note for three-quarters of his Income Tax on 1st January.

Mr. W. GRAHAM

The hon. Member is proceeding under a misapprehension. Wage-earners assessable half-yearly are not affected by the proposal. It only applies under Schedule E to those classes of taxpayers in official or other employment whose Income Tax is not deducted at the source.

Sir W. BRASS

I am much obliged to the right hon. Gentleman for his explanation. At any rate these people are badly hit in a certain way. They have to make out their own budgets, which are unbalanced. They are going to re- ceive their dividends, and so on, and there will be probably less dividends than there have been in previous years, and they will find it much more difficult to pay this advance of the Income Tax than has been the case in previous years. It has been assumed that this is not an increase of the Income Tax at all, but I do not agree with that argument. The Chancellor of the Exchequer is going to take from the country an extra £10,000,000, and what he says is that he is merely advancing the payment of the Income Tax, and that next year the same amount of Income Tax will be paid from the same source. I agree that that is the case, but if the right hon. Gentleman is going to collect £10,000,000 in this financial year it must come out of somebody's pocket. If this kind of thing goes on over a period of years the people under that particular schedule of the Income Tax will have actually paid £10,000,000 more than they would have paid during their lifetime if this proposal had not been brought forward. I think the Chancellor of the Exchequer will admit that that is bound to be the case, although, as one year follows another, the same amount will be collected in every succeeding year.

There is another point which ought to be made. The Chancellor of the Exchequer has increased the demand for

the Income Tax by a quarter, and he may follow his own example again next year, and do what the right hon. Gentleman the Member for Epping did with Schedule A, and that is take the whole lot on the 1st January instead of three-quarters, and a quarter on the 1st July. I think the Chancellor of the Exchequer will say that it is probable that there will be another emergency next year, and he may make that the excuse for advancing the whole lot, and taking it on 1st January. I suggest that it is very hard to pay the whole of this amount on the 1st January, and I ask the right hon. Gentleman whether it would not be possible to get in the same amount of money within the financial year before the end of March. It would make the tax a little lighter if people were allowed to pay it, say, on 25th March. That concession would help a great deal. Another suggestion I would like to make is that the right hon. Gentleman might give a certain rebate to those who paid their Income Tax within a week or a fortnight of the date when it was due. With such a rebate I think the right hon. Gentleman would find that he would get in a great deal more money.

Question put, "That the word 'three-quarters' stand part of the Resolution."

The House divided: Ayes, 255; Noes, 156.

Division No. 234.]	AYES.	[6.25 p.m.
Adamson, Rt. Hon. W. (Fife, West)	Carter, W. (St. Pancras, S. W.)	Glassey, A. E.
Adamson, W. M. (Staff., Cannock)	Chater, Daniel	Gossling, A. G.
Addison, Rt. Hon. Dr. Christopher	Clarke, J. S.	Graham, D. M. (Lanark, Hamilton)
Aitchison, Rt. Hon. Craigle M.	Cluse, W. S.	Graham, Rt. Hon. Wm. (Edin., Cent.)
Alpass, J. H.	Cocks, Frederick Seymour	Gray, Milner
Angell, Sir Norman	Compton, Joseph	Greenwood, Rt. Hon. A. (Colne)
Arnott, John	Cove, William G.	Griffith, F. Kingsley (Middlesbro' W.)
Aske, Sir Robert	Cripps, Sir Stafford	Griffiths, T. (Monmouth, Pontypool)
Attlee, Clement Richard	Daggar, George	Groves, Thomas E.
Ayles, Walter	Dallas, George	Grundy, Thomas W.
Baker, John (Wolverhampton, Bilston)	Davies, D. L. (Pontypridd)	Hall, G. H. (Merthyr Tydvil)
Baldwin, Oliver (Dudley)	Davies, Rhys John (Westhoughton)	Hall, J. H. (Whitechapel)
Barnes, Alfred John	Day, Harry	Hall, Capt. W. G. (Portsmouth, C.)
Barr, James	Denman, Hon. R. D.	Hamilton, Mary Agnes (Blackburn)
Batey, Joseph	Dudgeon, Major C. R.	Hamilton, Sir R. (Orkney & Zetland)
Benn, Rt. Hon. Wedgwood	Dukes, C.	Hardie, George D.
Bennett, Sir E. N. (Cardiff, Central)	Duncan, Charles	Harris, Percy A.
Bennett, William (Battersea, South)	Ede, James Chuter	Hastings, Dr. Somerville
Benson, G.	Edmunds, J. E.	Haycock, A. W.
Birkett, W. Norman	Edwards, C. (Monmouth, Bedwellty)	Hayes, John Henry
Bowerman, Rt. Hon. Charles W.	Edwards, E. (Morpeth)	Henderson, Rt. Hon. A. (Burnley)
Brockway, A. Fenner	Egan, W. H.	Henderson, Thomas (Glasgow)
Bromfield, William	England, Colonel A.	Henderson, W. W. (Middx., Enfield)
Brooke, W.	Foot, Isaac	Herriotts, J.
Brothers, M.	Freeman, Peter	Hicks, Ernest George
Brown, C W. E. (Notts, Mansfield)	Gardner, B. W. (West Ham, Upton)	Hirst, G. H. (York W. R. Wentworth)
Brown, Rt. Hon. J. (South Ayrshire)	Gardner, J. P. (Hammersmith, N.)	Hoffman, P. C.
Buchanan, G.	George, Rt. Hon. D. Lloyd (Car'vn)	Hollins, A.
Burgess, F. G.	George, Major G. Lloyd (Pembroke)	Hopkin, Daniel
Buxton, C R. (Yorks. W. R. Elland)	George, Megan Lloyd (Anglesea)	Horrabin, J. F.
Cameron, A. G.	Gibbins, Joseph	Hudson, James H. (Huddersfield)
Cape, Thomas	Gibson, H. M. (Lancs, Mossley)	Hunter, Dr. Joseph
Isaacs, George	Mills, J. E.	Short, Alfred (Wednesbury)
Jenkins, Sir William	Milner, Major J.	Simmons, C. J.
John, William (Rhondda, West)	Montague, Frederick	Simon, E. D. (Manch'ter, Withington)
Johnston, Rt. Hon. Thomas	Morley, Ralph	Sinclair, Sir A. (Caithness)
Jones, Llewellyn-, F.	Morris, Rhys Hopkins	Sinkinson, George
Jones, J. J. (West Ham, Silvertown)	Morris-Jones, Dr. J. H. (Denbigh)	Sitch, Charles H
Jones, Rt. Hon. Leif (Camborne)	Morrison, Rt. Hon. H. (Hackney, S.)	Smith, Ben (Bermondsey, Rotherhithe)
Jones, Morgan (Caerphilly)	Morrison, Robert C. (Tottenham, N.)	Smith, Frank (Nuneaton)
Jowett, Rt. Hon. F. W.	Mort, D. L.	Smith, Lees-, H. B.
Jewitt, Sir W. A. (Preston)	Muggeridge, H. T.	Smith, Rennie (Penistone)
Kedward, R. M. (Kent, Ashford)	Murnin, Hugh	Smith, Tom (Pontefract)
Kennedy, Rt. Hon. Thomas	Nathan, Major H. L.	Smith, W. R. (Norwich)
Kenworthy, Lt.-Com. Hon. Joseph M.	Naylor, T. E.	Sorensen, R.
Kinley, J.	Newman, Sir R. H. S. D. L. (Exeter)	Stamford, Thomas W.
Knight, Helford	Noel Baker, P. J.	Stephen, Campbell
Lang, Gordon	Noel-Buxton, Baroness (Norfolk, N.)	Strauss, G. R.
Lansbury, Rt. Hon. George	Oliver, George Harold (Ilkeston)	Sullivan, J.
Lathan, G.	Oliver, P. M. (Man., Blackley)	Sutton, J. E.
Law, Albert (Bolton)	Palin, John Henry.	Taylor, R. A. (Lincoln)
Law, A. (Rossendale)	Paling, Wilfrid	Taylor, W. B. (Norfolk, S. W.)
Lawrence, Susan	Palmer, E. T.	Thorne, W. (West Ham, Plaistow)
Lawson, John James	Parkinson, John Allen (Wigan)	Tillett, Ben
Lawther, W. (Barnard Castle)	Perry, S. F.	Tinker, John Joseph
Leach, W.	Pethick-Lawrence, F. W.	Tout, W. J.
Lee, Frank (Derby, N. E.)	Phillips, Dr. Marion	Townend, A. E.
Lee, Jennie (Lanark, Northern)	Picton-Turbervill, Edith	Trevelyan, Rt. Hon. Sir Charles
Lees, J.	Pole, Major D. G.	Vaughan, David
Lewis, T. (Southampton)	Potts, John S.	Viant, S. P.
Lloyd, C. Ellis	Price, M. P.	Walkden, A. G.
Longbottom, A. W.	Quibell, D. J. K.	Walker, J.
Longden, F.	Ramsay, T. B. Wilson	Watkins, F. C.
Lovat-Frasar, J. A.	Rathbone, Eleanor	Watson, W. M. (Dunfermline)
Lunn, William	Raynes, W. R.	Watts-Morgan, Lt.-Col. D. (Rhondda)
MacDonald, Rt. Hon. J. R. (Seaham)	Richards, R.	Wedgwood, Rt. Hon. Josiah
MacDonald, Malcolm (Bassetlaw)	Richardson, R. (Houghton-le-Spring).	Wellock, Wilfred
McElwee, A.	Riley, Ben (Dewsbury)	West, F. R.
McEntee, V. L.	Ritson, J.	Westwood, Joseph
McKinlay, A.	Romeril, H. G.	White, H. G.
MacLaren, Andrew	Rosbotham, D. S. T.	Whiteley, Wilfrid (Birm., Ladywood)
Maclean, Sir Donald (Cornwall, N.)	Rowson, Guy	Whiteley, William (Blaydon)
Maclean, Nell (Glasgow, Govan)	Salter, Dr. Alfred	Wilkinson, Ellen C.
McShane, John James	Samuel, Rt. Hon. Sir H. (Darwen)	Williams, David (Swansea, East)
Malone, C. L'Estrange (N'thampton)	Sanders, W. S.	Williams, Dr. J. H. (Llanelly)
Mander, Geoffrey le M.	Sandham, E.	Williams, T. (York, Don Valley)
Manning, E. L.	Sawyer, G. F.	Wilson, C. H. (Sheffield, Attercliffe)
Marcus, M.	Scurr, John	Wilson, J. (Oldham)
Markham, S. F.	Sexton, Sir James	Wilson, R. J. (Jarrow)
Marley, J.	Shaw, Rt. Hon. Thomas (Preston)	Winterton, G. E. (Leicester, Loughb'gh)
Marshall, Fred	Shepherd, Arthur Lewis	Wise, E. F.
Mathers, George	Sherwood, G. H.	Wood, Major McKenzie (Banff)
Matters, L. W.	Shield, George William	Young, R. S. (Islington, North)
Maxton, James	Shiels, Dr. Drummond
Messer, Fred	Shillaker, J. F.	TELLERS FOR THE AYES.—
Middleton, G.	Shinwell, E.	Mr. Thurtle and Mr. Charleton.
NOES.
Acland-Troyte, Lieut.-Colonel	Cobb, Sir Cyril	Gilmour, Lt.-Col. Rt. Hon. Sir John
Albery, Irving James	Cockerill, Brig.-General Sir George	Graham, Fergus (Cumberland, N.)
Amory, Rt. Hon. Leopold C. M. S.	Colman, N. C. D.	Grattan-Doyle, Sir N.
Astor, Maj. Hn. John J. (Kent, Dover)	Colville, Major D. J.	Grenfell, Edward C. (City of London)
Baldwin, Rt. Hon. Stanley (Bewdley)	Cranborne, Viscount	Gretton, Colonel Rt. Hon. John
Berry, Sir George	Crookshank, Capt H. C.	Gunston, Captain D. W.
Betterton, Sir Henry B.	Croom-Johnson, R. P.	Hacking, Rt. Hon. Douglas H.
Bevan, S. J. (Holborn)	Culverwell, C. T. (Bristol, West)	Hall, Lieut.-Col. Sir F. (Dulwich)
Birchall, Major Sir John Dearman	Cunliffe-Lister, Rt. Hon. Sir Philip	Hamilton, Sir George (Ilford)
Bourne, Captain Robert Croft	Dairymple-White, Lt.-Col. Sir Godfrey	Hannon, Patrick Joseph Henry
Bowyer, Captain Sir George E. W.	Davidson, Rt. Hon. J. (Hertford)	Hartington, Marquess of
Boyce, Leslie	Davies, Maj. Geo. F.(Somerset, Yeovil)	Harvey, Major S. E. (Devon, Totnes)
Bracken, B.	Davison, Sir W. H. (Kensington, S.)	Henderson, Capt. R. R. (Oxf'd, Henley)
Brass, Captain Sir William	Duckworth, G. A. V.	Heneage, Lieut.-Colonel Arthur P.
Broadbent, Colonel J.	Dugdale, Capt. T. L.	Herbert, Sir Dennis (Hertford)
Brown, Ernest (Leith)	Eden, Captain Anthony	Hills, Major Rt. Hon. John Waller
Brown, Brig.-Gen. H. C. (Berks. Newb'y)	Edmondson, Major A. J.	Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Buchan, John	Elliot, Major Walter E.	Howard-Bury, Colonel C. K.
Buchan-Hepburn, P. G. T.	Erskine, Lord (Somerset, Weston-S.-M.)	Hudson, Capt. A. U. M.(Hackney, N.)
Buckingham, Sir H.	Falle, Sir Bertram G.	Hurd, Percy A.
Campbell, E. T.	Ferguson, Sir John	Hurst, Sir Gerald B.
Carver, Major W. H.	Fermoy, Lord	Hutchison, Maj.-Gen. Sir R.
Castle Stewart, Earl of	Fielden, E. B.	Inskip, Sir Thomas
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)	Ford, Sir P. J.	Jones, Sir G. W. H. (Stoke New'gton)
Chamberlain, Rt. Hon. N. (Edgbaston)	Forestier-Walker, Sir L.	Kindersley, Major G. M.
Chapman, Sir S.	Fremantle, Lieut.-Colonel Francis E.	Knox, Sir Alfred
Clydesdale, Marquess of	Galbraith, J. F. W.	Lamb, Sir J. Q.

Lambert, Rt. Hon. George (S. Molton)	Peto, Sir Basil E. (Devon, Barnstaple)	Taylor, Vice-Admiral E. A.
Lane Fox, Col. Rt. Hon. George R.	Pownall, Sir Assheton	Thompson, Luke
Law, Sir Alfred (Derby, High Peak)	Pybus, Percy John	Thomson, Mitchell-, Rt. Hon. Sir W.
Leighton, Major B. E. P.	Ramsbotham, H.	Tinne, J. A.
Lewis, Oswald (Colchester)	Remer, John R.	Titchfield, Major the Marquess of
Llewellin, Major J. J.	Reynolds, Col. Sir James	Todd, Capt. A. J
Locker-Lampson, Rt. Hon. Godfrey	Richardson, Sir P. W. (Sur'y, Ch'te'y)	Train, J.
Locker-Lampson, Com. O.(Handsw'th)	Rodd, Rt. Hon. Sir James Rennell	Tryon, Rt. Hon. George Clement
McConnell, Sir Joseph	Ruggles-Brise, Colonel E.	Turton, Robert Hugh
Marjoribanks, Edward	Russell, Alexander West (Tynemouth)	Vanghan-Morgan, Sir Kenyon
Mason, Colonel Glyn K.	Salmon, Major I.	Wallace, Capt. D. E. (Hornsey)
Meller, R. J.	Samuel, A. M. (Surrey, Farnham)	Ward, Lieut.-Col. Sir A. Lambert
Millar, J. D.	Sandeman, Sir N. Stewart	Warrender, Sir Victor
Milne, Wardlaw-, J. S.	Shepperson, Sir Ernest Whittome	Waterhouse, Captain Charles
Monsell, Eyres, Com. Rt. Hon. Sir B.	Simon, Rt. Hon. Sir John	Wayland, Sir William A.
Moore, Lieut.-Colonel T. C. R. (Ayr)	Skelton, A. N.	Wells, Sydney R.
Morrison, W. S. (Glos., Cirencester)	Smith, Louis W. (Sheffield, Hallam)	Williams, Charles (Devon, Torquay)
Muirhead, A. J.	Smith, R. W.(Aberd'n & Kinc'dine, C.)	Windsor-Clive, Lieut.-Colone George
Newton, Sir D. G. C. (Cambridge)	Smith-Carington, Neville W.	Winterton, Rt. Hon. Earl
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)	Somerville, A. A. (Windsor)	Wolmer, Rt. Hon. Viscount
O'Connor, T. J.	Southby, Commander A. R. J.	Womersley, W. J.
O'Neill, Sir H.	Spender-Clay, Colonel H.	Wood, Rt. Hon. Sir Kingsley
Ormsby-Gore, Rt. Hon. William	Stanley, Lord (Fylde)	Young, Rt. Hon. Sir Hilton
Peake, Captain Osbert	Stanley, Hon. O. (Westmorland)
Penny, Sir George	Steel-Maitland, Rt. Hon. Sir Arthur	TELLERS FOR THE NOES.—
Percy, Lord Eustace (Hastings)	Sueter, Rear-Admiral M. F.	Major Sir George Hennessy and
		Sir Frederick Thomson.

Sir B. PETO

I beg to move, in line 6, at the end, to add the words: and that in the said sub-section, for the first day of January the first day of February shall be substituted. I can deal with this question quite shortly, because the President of the Board of Trade, in answering the Amendment upon which we have just divided, franky admitted that there is a charge in the present financial year of an extra quarter of Income Tax upon all Income Tax payers under Schedules B, D and E, excepting those under Schedule D, whose Income Tax is deducted at the source. Therefore, the fact that there will be a great additional charge in one financial year upon these sections of Income Tax payers is admitted. I want by this Amendment to try to temper the wind to the shorn lamb; I want to try to avoid all these claims falling upon one day, and a very inconvenient day in the year, namely, the 1st January. I need not trouble the House with all the arguments that have been so ably put from these benches as to the special claims on the income of every taxpayer just at that time of the year, but it is clear that, if the Government could see their way to make this small concession, they would not be losing any revenue at all, because there would still be two months before the end of the financial year for the collection of the revenue, and the Amendment does not propose any reduction in the amount claimed in the financial year, but only asks that these claims should not all be due for payment on the 1st January. I quite recognise that under existing practice many Income Tax payers find it impossible to pay "on the nail" at the very moment when they are asked for the money, but it would be a great relief that this claim should positively not be due to the Government until they had had a month's breathing space after dealing with all the other financial commitments that occur at the end of one year and the beginning of the next.

That is not the only argument that I want to address to the House. We have heard in the earlier Debates, and earlier this afternoon, frequent references to the fact that the right hon. Gentleman the Member for Epping (Mr. Churchill), when he was Chancellor of the Exchequer in 1927, withdrew a concession made in 1918 to Income Tax payers under Schedule A, enabling them to pay their Income Tax in two equal half-yearly instalments, and demanded that, as was the case before 1918, they should pay the whole of their Income Tax in one payment on the 1st January. I would ask the House to look at what happened. In 1918, when the Income Tax was raised to 6s. in the £, it was felt that even taxpayers under Schedule A must be given the same concession which, a the President of the Board of Trade pointed out, was given to Income Tax payers under Schedules B, D and E in 1915, when the Income Tax was raised by 40 per cent., from 2s. 6d. to 3s. 6d. in the £. I think it is well that the House should realise exactly what the figures were, and what the circumstances were. My right hon. Friend the Member for Epping said that Income Tax payers under Schedule A, who had only come into possession of this privilege of paying in two half-yearly payments nine years before, in the special circumstances surrounding the finances of the country in 1927, must in 1927 pay as before in one instalment, and, as the President of the Board of Trade has pointed out, he estimated for £15,000,000 and he got £17,000,000 by that process. But that is not on all fours with What is proposed under this Resolution.

This Resolution goes back to a concession that was made in 1915; and I would point out to the House that Income Tax payers under Schedule A are, taking them broad and large, a more permanent body of Income Tax payers than those under Schedules B, D and E, so that there is more probability that the same man who received the concession would be the man who is asked to forego it. In case the President of the Board of Trade should be using the argument that there is really no hardship because he is only taking back one-half of a concession that was made 16 years ago, I would make this answer, that it is no consolation to a professional man who started his career, say, 15 or 16 years ago—it is no consolation to Mr. Smith, who is made to pay five quarters of Income Tax in a single year, that Mr. Jones, or Mr. Brown, or Mr. Robinson had the opportunity of paying only half a year's Income Tax in a single year 16 years before. That is really the proposition. I fully realise what my hon. and gallant Friend the Member for Kelvingrove (Major Elliot) made so plain a few minutes ago, that the Chancellor of the Exchequer still has another £10,000,000—another half of this concession—up his sleeve ready for next year. The late Chancellor of the Exchequer, the right hon. Gentleman the Member for Epping, took the whole thing at one bite as far as Schedule A was concerned. The present Chancellor of the Exchequer, being a provident man, is leaving half his cherry for the next bite next year.

What we are proposing is not, however, at all parallel to what was done in 1927. I think I have made it plain that it is not at all the same class of Income Tax payers who are affected. This is after an interval of 16 years; the other was after an interval of only nine years; and, moreover, the concession for which I am asking is only a single month's postponement of this extra charge which is now sprung upon this class of Income Tax payers, who had no reason to anticipate that they were the source to which the Chancellor would go for £10,000,000 to balance his nicely balanced Budget, the balance of which has already been upset by matters that we discussed in the earlier days of this week. That being so, whether the President of the Board of Trade was right or wrong in saying that he thought the last Amendment had been moved more with a view to ventilating this question than with any hope of its being conceded, I can assure the right hon. Gentleman that so modest is my request in this Amendment that, knowing him to be a tender-hearted man who does not want to impose unnecessary hardship upon probably the most deserving and hard-working class of any in this country—people who have built up a little business for themselves, whether in retail trade or in industry, or people who are earning their living by their own brains at an enormous annual expenditure of those brains, which are their only capital—I feel quite sure he will realise that they have many claims upon them on the 1st January, and that it would be a very small concession to make this new and unexpected claim actually due for payment one month later.

Various proposals have been put forward on these lines in letters to the Press—for example, that this new exaction should be divided into three parts, one-third being payable on 1st January, one-third on 1st February, and one-third on the 1st March. I do not think that that is a practicable proposal, but the proposal in this Amendment is practicable. The proposal that a portion of the tax should become due for payment as late as the 1st March, within a month of the end of the financial year, is, I think, clearly answered by the statement that it would be impossible, with only one month for collection, to make it even probable that the whole of that Income Tax would be got in within the financial year; but to give the Income Tax Department a clear two months or rather more before the end of the financial year in which to collect this three-fourths would not endanger the anticipation of revenue to be derived. On that ground I say also that this is a reasonable Amendment and one which I feel hopefully will be accepted.

Sir A. POWNALL

I beg to second the Amendment.

I entirely agree with the reasons my hon. Friend has given with regard to the great difficulty that will be experienced by those who, in addition to heavy bills, will also have to find so much extra Income Tax. There is a further reason why I am in favour of it which will commend itself to such a great administrator as the President of the Board of Trade. The Income Tax offices have a very hard time before Christmas in getting out all their demand notes for 1st January, when the money starts coming in. By this very ingenious proposal, they will reduce the administrative work, because under Schedule A the demand notes go out before Christmas and the money starts coming in as from 1st January, whereas with the other three Schedules, B, D and E, it will not be necessary for the demand notes to go out so quickly and the money will be coming in more in February and March. It ought to save a great deal of overtime in the Income Tax offices, and I commend that as a further reason why the Amendment should be accepted.

Mr. W. GRAHAM

The hon. Members who have moved and seconded the Amendment have made a very powerful and even a moving appeal. The hon. Baronet appealed to me to temper the wind to the shorn lamb. It is very difficult to resist an argument of that kind, but the lamb that I have to protect is this additional £10,000,000 of revenue due to the accelerated collection of an additional quarter within the financial year. One of the melancholy results of this proposal is that my lamb would disappear altogether, so that I think that with that little explanation hon. Members will see that I cannot possibly accept the Amendment. The effect of it is to postpone until 1st February the collection of the additional quarter, so that at a stroke we are reduced from three months to two months of collection of this additional sum. But I am advised that on the other side the effect of the Amendment as drawn would be to postpone until 1st February the collection of the half of the tax which is collected under the present practice, and I should be deprived of that, although I should have the gain of the remaining two months of the additional quarter. The gain on the one side is, I understand, wiped out by the loss on the other, and I am left practically without this £10,000,000. Having given that explanation, the hon. Baronet will see that he does not really temper the wind to the shorn lamb. The additional sum which the Treasury requires within the financial year would practically disappear and, accordingly, I cannot accept the Amendment.

Major ELLIOT

It becomes clearer and clearer how flimsy is the excuse that no real injury whatever is being done to the Income Tax payer. It seems clear that the Government intend to get in the whole of the money within the three months. I quite agree with the soundness of the right hon. Gentleman's argument that the Amendment would postpone the whole collection of that moiety of the Income Tax which falls due and, if there is any alteration of drafting by which we could make it acceptable, I am sure my hon. Friend would be only too pleased to discuss the matter with him between now and the later stages. But I am sure the President of the Board of Trade would not wish to ride off on a technicality like that. Let us take it that we are not attempting to postpone the payment of the moiety of the Income Tax which is properly due in January. What we are discussing is whether we can temper the wind to the shorn lamb by a postponement, or a slight modification, of that instalment of extra impost which falls due then. The right hon. Gentleman's lamb is a dead lamb while ours is a live one. When it is finished it is done. He is carrying away merely a carcase of mutton. This may never occur again. He is making this impost once for all. We wish, if not to temper the wind to the shorn lamb, at least to put a little artificial heating into the nest of the goose that lays the golden eggs. We wish to preserve the source of his revenue. We are afraid he is going to dry it up altogether.

These exactions falling upon the Income Tax payer will have the effect either of crippling him financially, so that he is not able to go on and earn as much in future years, or of causing him to realise that much the most profitable exercise of his wits in which anyone can indulge is considering how he can evade paying his Income Tax. It becomes a very serious thing when a man can earn £40 better by paying a lawyer to think out some way of dodging his Income Tax than by earning a little money. The whole of our Income Tax system is based upon the fact that it is so delicately balanced and so graded that on the whole it is easier for a man to pay his Income Tax than not. We have, on the whole, the best and most loyal payers of Income Tax in the world. I am sure the finance Ministers of any Continental Power would be only too glad to reduce their demands by 10, 15 or 20 per cent. if they could get the taxes paid as regularly as in Great Britain.

This is a small concession. We are asking that the right hon. Gentleman shall cast bread upon the waters which will return again to him. We are admitting the liability. We are not asking for a remission of a penny of the new liability that is placed on the shoulders of the unfortunate Income Tax payers, but we are suggesting that a little of it might be allowed to fall over into the month after 1st January. The small man, especially in the London area, is being hit very heavily this year owing to the Revaluation Bill of last year. The assessments for rating have been increased in many cases and there will be an extra demand for rates. All these demands will fall upon him in this year of depression. We ask the right hon. Gentleman to consider at least the spirit of the appeal that has been made. If he will not meet us in this respect, let him consider whether he cannot afford some crumb of comfort to the Income Tax payer, from whom he is about to raise £10,000,000 on the plea that we are in a year of unexampled depression which is quite as heavy upon the people from whom this levy is to be made as upon any other class of the community.

Major HARVEY

I should like to add a small voice from a back bench to the appeal of my hon. and gallant Friend. I feel that the wind would be tempered to the shorn lamb very considerably if the President of the Board of Trade between this and another stage would draft an Amendment which would carry out the hon. Baronet's intention. I believe it is a fact that in the collection of this tax a good deal of the money that falls due on 1st January never comes into the Exchequer until after February, Will he not take that into consideration and make the taxpayer pay a little more cheerfully by giving him a little law? If the Amendment, or something akin to it, gets on to the Statute Book, I have visions of my hon. Friend going down to history as a public benefactor in the same category as the, people who introduced summer time and the 24-hour clock.

7.0 p.m.

Mr. CHAMBERLAIN

I am afraid my slower mind did not grasp the argument of the President of the Board of Trade as rapidly as that of my hon. and gallant Friend beside me. Even now I am unable to follow the argument by which he, apparently, endeavoured to persuade us that, if the Amendment were accepted, he would lose the whole of the £10,000,000 which he expects to get out of this proposal. His arithmetic seems to be almost as remarkable as that of the hon. Member for Chesterfield (Mr. Benson), who explained to us that £10,000,000 in the pockets of the Treasury only meant £250,000 out of the pockets of the taxpayers. My hon. Friend is not moving to reduce the amount that is to go to the Exchequer by a penny. There are two ways in which you can envisage the proposal. There is the effect upon the Budget and the effect upon the taxpayer. In this Amendment we are considering the effect upon the taxpayer. What my hon. Friend wants to do is to postpone the time at which the taxpayer is called upon to make this exceptional contribution to the State from a date which is probably the most inconvenient in the whole 12 months to a later period when, without any loss to the Treasury, he will make the same contribution with somewhat greater ease to himself. I am still a little doubtful what is the real number of individuals to whom this change applies. After all, the various Schedules which are concerned comprises a number of different classes of persons. There are not only individuals, but there are firms who may be subject to Schedule D. Among those firms there will be some whose particular contribution is quite large. If that be so, then the larger the contribution of the individual firms, the smaller the amount winch must on the average be collected from the whole number. I hope the Financial Secretary will tell us exactly who are the people who come under Schedule D and are affected by this proposal, and how many there are of them. I believe that, if it were only analysed and if we could get some clearer classification of the people affected, we should find that there are a large number of people with small incomes subject to this impost to whom the postponement for one month would be a most valuable concession.

What was the argument of the President of the Board of Trade? I regret I could not grasp it at the time, but I can only assume that his argument is that, if you postpone the due date of collection by one month, you will lose the whole amount paid into the Treasury, as it will pass into the following year. If I am wrong, I hope the right hon. Gentleman will enlighten us, because that was the only way I could conceive it would be lost, namely, by passing into the following year. I doubt whether that is likely to be the effect of these proposals, because I have the greatest respect for the efficiency of the collectors of revenue and can hardly imagine they would allow all this money to pass through their fingers merely because the date had been postponed by one month. If the date was fixed at 1st February, it would still leave two months for collection. Of course, there is always a certain leakage from one financial year to another, but I can hardly believe that it would be so increased as to make any substantial difference to the Exchequer. I hope, if I have not misrepresented the right hon. Gentleman, that he will reconsider the matter and, if I have in any way misunderstood him, that we may have some further explanation from the Financial Secretary.

Mr. A. SOMERVILLE

There are two considerations which I would like to put to the right hon. Gentleman before he rises. In the first place, it is a dangerous thing to encourage in any class of the community the feeling that they are unjustly treated in taxation. As an additional Commissioner of Income Tax, I have had an opportunity of seeing something of the possibilities of evasion of Income Tax. There is undoubtedly a growing feeling among Income Tax payers that they are the milch cow of the community and are being unfairly treated. That feeling is being strengthened by the hard times, which are intensified by the lavish expenditure of the present Government. The second consideration I would ask the right hon. Gentleman to take into account is the many communities of our people who are settled in various parts of the world, who would be living here and paying Income Tax but who are settled abroad because they cannot afford to pay our Income Tax. If he goes to Victoria, in British Columbia, he will find there a colony of English settlers, men and woman who have been holding appointments in the Colonies and Dominions, who say quite frankly that they cannot come back to live in England because of the taxation. I would ask the right hon. Gentleman to consider the amount of revenue we are losing. Let him go to France, and he will find English settlers there for the same reason. He ought to encourage those people to come back and live in England and spend their money here. Those are two considerations which I would ask the right hon. Gentleman to take into account.

Mr. W. GRAHAM

My hon. Friend the Financial Secretary would have replied, but for the fact that he was out during this part of the Debate, and he has asked me to say an additional word or two in reply to the points put by the right hon. Gentleman opposite. On the two points, the facts are these. The classes who are affected by the addition of this quarter were described in my speech on the preceding Amendment. There is a certain section of taxpayers under Schedule A enjoying an income from property associated with land; a second section under Schedule B, the occupation of land; certain classes of taxpayers under Schedule D—that is, other than companies—and the taxpayers affected there are private firms or individuals whose income is not taxed at the source; and a certain class under Schedule E, officials and others whose income is not taxed at the source. Those are the classes, broadly speaking, who would be affected by the change from one-half to three-quarters in January each year. The number, of course, would be considerable, and that at no stage of the Debate has been concealed.

Mr. CHAMBERLAIN

Could the right hon. Gentleman say how many?

Mr. GRAHAM

No, I could not, but the number undoubtedly would be considerable. On the other point, may I try to give this explanation? The Amendment as proposed by the hon. Baronet the Member for Barnstaple (Sir B. Peto) seeks to postpone this change to 1st February in the present financial year. I am advised that the effect of the Amendment, as it is on the Paper, would be also to postpone until that date the collection of the existing half, to which we are entitled on 1st January. That is to say, the period would be pushed back one month for the ordinary collection.

Sir A. POWNALL

On B, D and E or A as well?

Mr. GRAHAM

On the usual range of Schedules to which that applies, but that is not the point. I am advised that it would postpone by one month until 1st February the collection which now proceeds, the collection of one-half the Income Tax. The whole three-quarters would become due on 1st February of the current financial year. There is that loss in point of time in regard to one month for the period of collection of the three quarters, which the House has now carried by a majority. The Amendment is so drawn that the loss one way wipes out the prospective gain the other way. I am giving the House advice, which I believe to be perfectly sound, as to the effect of this Amendment. The hon. and gallant Member for Kelvingrove (Major Elliot) sought to draw a distinction. He was willing in some way to postpone by one month the collection of the increase, that is to say, to safeguard the collection of the existing half to which we are entitled on 1st January. There is no doubt that, if that were the intention of hon. and right hon. Gentlemen opposite, then, of course, the Exchequer would not get the full amount of the £10,000,000, but it would get in the financial year not-very little, as under this Amendment, but some substantial sum. There would be a loss of some part of the £10,000,000, but we cannot afford even a partial loss of the amount which would be involved if we accepted an Amendment in the sense which my hon. and gallant Friend suggested.

Sir A. STEEL-MAITLAND

Having listened to all this Debate carefully, with every fresh explanation the flimsiness of the case becomes clearer and, if I may say so without wishing to be in any way offensive, the meanness of it becomes more apparent, too. Let me take what has now been disclosed. First of all, as to the classes who are hit, the Financial Secretary to the Treasury has told us that they are the classes which, I have no doubt, are those contained in Section 157 of the Act. Apart from Schedule A, they are: Any individual or firm under Schedule B in respect of lands occupied for husbandry only, and tax charged on any individual or firm under Schedule D, or the rules thereof, in respect of the profits or gains of any trade or of any profession or vocation, and tax charged on any individual in respect of any office or employment, whether under Schedule D or Schedule E, except individuals whose tax is deducted at definite intervals of less than half a year, and weekly wage-earners. That is the class of people who are hit. I would ask the House to mark that the Financial Secretary himself has told us that they are, and must be, a very considerable number now. When we reflect that there are a considerable number of rich firms who probably enjoy this privilege, it means that the number must be greater, because the average amount per person is decreased and the number of poor persons is greater. They are precisely the kind of people who are feeling the brunt of the present circumstances most acutely. The people who are probably feeling the brunt most acutely are the farming population. At an earlier stage, the Financial Secretary alluded to easements of their lot given them as a matter of justice by the late Government, and that these things were to balance out against those easements. Everyone knows that in the last two years their lot has been made infinitely harder, and they are the people who will find it most difficult to produce this extra sum at the earlier stage of the year. The same is true of the others. The professional classes, if they are questioned, will say at once that their business has fallen off and that their receipts are probably smaller than at any time during their experience. The Treasury is trying to get a sum of £10,000,000. The whole of the Income Tax received is over £400,000,000, yet the Treasury is getting this £10,000,000 at the expense of the payers of £40,000,000, one-tenth of the whole of the Income Tax paid. As those individuals consist of some of those least able to produce the money at this earlier date, this is a very regrettable provision which the right hon. Gentleman has introduced into his Budget.

There is another point which my friends and I are completely unable to understand. The Financial Secretary said that if the date is postponed from 1st January to 1st February, the Exchequer will lose the £10,000,000. Let me assume, to start with, that the whole of that three-quarters is postponed, not merely the extra quarter which he is trying to get, but the half which, normally, if the provision were not brought in to the Finance Bill, would have been paid on 1st January. Suppose that the whole three-quarters are postponed from the 1st January to the 1st February. It would be a matter of justice, if nothing else. It would mean that the Income Tax payer would have a postponement of one-half for a month, which would make up just a little to him for the ante-dating of the other quarter by five months. While, as the late Lord Oxford would have said, it is a slight solatium but not compensation for what is happening, it would, nevertheless, make their lot a little less hard. The Financial Secretary says: "Oh, but the Treasury would lose the whole of the £10,000,000." How on earth would it lose £10,000,000? It would have a right to the £10,000,000 on the 1st February, instead of on 1st January. How is the Treasury losing the whole of that £10,000,000? It might be argued that it is losing interest on that money for one month, but it is perfectly clear that it is not losing the right to that £10,000,000 at all.

The only conceivable statement that could be made in support of that alleged loss is, that because the Treasury have only two months for collection instead of three, before the end of the financial year, the money will not come in. I put that as the best case that can be made for the statement by the Financial Secretary. I believe there can be no other. I do not know whether that was the hon. Gentleman's point. I do not think that either he or the President of the Board of Trade will deny that the State would get its right to the whole of the three-quarters on 1st February, instead of on 1st January. It would lose one month for collection, having two months instead of three. As everyone knows, we are dealing with a small Income Tax paying capacity, though it is borne by a number of individuals. Surely, if there was the wish to temper the wind to the shorn lamb, the Revenue authorities could easily concentrate their attention on the far greater number of payers from 1st January, and upon getting more for the first month, in order to see that the collection during the last two months from this unfortunate lot of people should not suffer. I submit that we have had no possible shadow of a case for not granting this slight relief, under which we are endeavouring to secure to the Treasury the very £10,000,000 that they wish to have, while not making people who can ill afford the money suffer the greater hardships that they would under the present proposal.

Miss RATHBONE

The prospect of this payment on 1st January is weighing heavily on a considerable number of people in a small way of business, and also on professional people with fixed salaries, and I want to add my voice to back up the demand that the President of the Board of Trade or the Financial Secretary should devise some way of making a concession so as to postpone payment of the additional quarter till February. I am not an expert in these matters, and I confess that I found it difficult to understand the explanations that the President of the Board of Trade gave us. A very large proportion of the Income Tax payers use to the utmost the very considerable "rope" that is given to them. They receive three notices. They wait until their 27 days' notice is up, and then they get a notice asking them to pay in seven days. If they do not pay, they then get a notice asking them to pay in three days, and then they pay. The others are the more timid or conscientious people, who do not know what would happen to them if they postponed the payment, and so they pay at once. If there were a little less "rope" allowed, and a little more lati- tude to the people who are willing to pay, it would be of great convenience to the people who are in receipt of fixed salaries. They would know, when they received their demand for payment in February, that they were definitely not pledged to pay till the end of the following

month. I ask the Financial Secretary if he can think the matter over again.

Question put, "That those words be there added to the Resolution."

The House divided: Ayes, 177; Noes, 253.

Division No. 235.]	AYES.	[7.20 p.m.
Acland-Troyte, Lieut.-Colonel.	Falle, Sir Bertram G.	Oman, Sir Charles William C.
Ainsworth, Lieut.-Col. Charles	Ferguson, Sir John	O'Neill, Sir H.
Albery, Irving James	Fielden, E. B.	Ormsby-Gore, Rt. Hon. William
Amery, Rt. Hon. Leopold C. M. S.	Fison, F. G. Clavering	Peake, Capt. Osbert
Astor, Maj. Hn. John J. (Kent, Dover)	Ford, Sir P. J.	Penny, Sir George
Atholl, Duchess of	Forestier-Walker, Sir L.	Percy, Lord Eustace (Hastings)
Baldwin, Rt. Hon. Stanley (Bewdley)	Fremantle, Lieut.-Colonel Francis E.	Peto, Sir Basil E. (Devon, Barnstaple)
Balfour, Captain H. H. (I. of Thanet)	Galbraith, J. F. W.	Pownall, Sir Assheton
Balniel, Lord	Ganzonl, Sir John	Purbrick, R.
Beamish, Rear-Admiral T. P. H.	Gault, Lieut.-Col. A. Hamilton	Ramsbotham, H.
Beaumont, M. W.	Gilmour, Lt.-Col. Rt. Hon. Sir John	Rathbone, Eleanor
Bellairs, Commander Carlyon	Graham, Fergus (Cumberland, N.)	Remer, John R.
Betterton, Sir Henry B.	Grattan-Doyle, Sir N.	Reynolds, Col. Sir James
Bevan, S. J. (Holborn)	Greene, W. P. Crawford	Richardson, Sir P. W. (Sur'y, Ch'te'y)
Birchall, Major Sir John Dearman	Grenfell, Edward C. (City of London)	Roberts, Sir Samuel (Ecclesall)
Bird, Ernest Roy	Hacking, Rt. Hon. Douglas H.	Rodd, Rt. Hon. Sir James Rennell
Bourne, Captain Robert Croft	Hall, Lieut.-Col. Sir F. (Dulwich)	Ruggles-Brise, Colonel E.
Bowater, Col. Sir T. Vansittart	Hamilton, Sir George (Ilford)	Russell, Alexander West (Tynemouth)
Bowyer, Captain Sir George E. W.	Hammersley, S. S.	Saimon, Major I.
Boyce, Leslie	Hannon, Patrick Joseph Henry	Samuel, A. M. (Surrey, Farnham)
Bracken, B.	Hartington, Marquess of	Sandeman, Sir N. Stewart
Brass, Captain Sir William	Harvey, Major S. E. (Devon, Totnes)	Sassoon, Rt. Hon. Sir Philip A. G. D.
Broadbent, Colonel J.	Henderson, Capt. R. R. (Oxf'd, Henley)	Shepperson, Sir Ernest Whittoms
Brown, Brig.-Gen. H. C. (Berks, Newb'y)	Hennessy, Major Sir G. R. J.	Skelton, A. N.
Buchan-Hepburn, P. G. T.	Herbert, Sir Dennis (Hertford)	Smith, Louis W. (Sheffield, Hailam)
Buchan, John	Hills, Major Rt. Hon. John Waller	Smith, R. W. (Aberd'n & Kinc'dine, C.)
Bullock, Captain Malcolm	Hore-Belisha, Leslie	Smith-Carington, Neville W.
Campbell, E. T.	Howard-Bury, Colonel C. K.	Smithers, Waldron
Carver, Major W. H.	Hudson, Capt. A. U. M. (Hackney, N.)	Somerville, A. A. (Windsor)
Castle Stewart, Earl of	Hunter-Weston, Lt.-Gen. Sir Aylmer	Somerville, D. G. (Willesden, East)
Cayzer, Sir C. (Chester, City)	Hurd, Percy A.	Southby, Commander A. R. J.
Cazalet, Captain Victor A.	Hurst, Sir Gerald B.	Spender-Clay, Colonel H.
Chamberlain, Rt. Hn. Sir J. A.(Birm., W.)	Hutchison, Maj.-Gen. Sir R.	Stanley, Lord (Fylde)
Chamberlain, Rt. Hon. N. (Edgbaston)	Inskip, Sir Thomas	Stanley, Hon. O. (Westmorland)
Chapman, Sir S.	Iveagh, Countess of	Steel-Maitland, Rt. Hon. Sir Arthur
Clydesdale, Marquess of	Jones, Sir G. W. H. (Stoke New'gton)	Stewart, W. J. (Belfast South)
Cobb, Sir Cyril	Kindersley, Major G. M.	Stuart, Hon. J. (Moray and Nairn)
Cockerill, Brig.-General Sir George	Knox, Sir Alfred	Sueter, Rear-Admiral M. F.
Colman, N. C. D.	Lamb, Sir J. Q.	Thompson, Luke
Colville, Major D. J.	Lane Fox, Col. Rt. Hon. George R.	Thomson, Mitchell-, Rt. Hon. Sir W.
Conway, Sir W. Martin	Law, Sir Alfred (Derby, High Peak)	Todd, Capt. A. J.
Courtauld, Major J. S.	Leighton, Major B. E. P.	Train, J.
Cranborne, Viscount	Lewis, Oswald (Colchester)	Tryon, Rt. Hon. George Clement.
Croft, Brigadier-General Sir H.	Llewellin, Major J. J.	Turton, Robert Hugh
Croom-Johnson, R. P.	Locker-Lampson, Rt. Hon. Godfrey	Vaughan-Morgan, Sir Kenyon
Culverwell, C. T. (Bristol, West)	Locker-Lampson, Com. O.(Handsw'th)	Ward, Lieut.-Col. Sir A. Lambert
Cunliffe-Lister, Rt. Hon. Sir Philip	McConnell, Sir Joseph	Warrender, Sir Victor
Dalkeith, Earl of	Macdonald, Capt. P. D. (I. of W.)	Waterhouse, Captain Charles
Dalrymple-White, Lt.-Col. Sir Godfrey	Maitland, A. (Kent, Faversham)	Wayland, Sir William A.
Davidson, Rt. Hon. J. (Hertford)	Margesson, Captain H. D.	Wells, Sydney R.
Davies, Maj. Geo. F.(Somerset, Yeovil)	Marjoribanks, Edward	Williams, Charles (Devon, Torquay)
Davison, Sir W. H. (Kensington, S.)	Merriman, Sir F. Boyd	Windsor-Clive, Lieut.-Colonel George
Duckworth, G. A. V.	Millar, J. D.	Winterton, Rt. Hon. Earl
Dugdale, Capt T. L.	Milne, Wardlaw-, J. S.	Withers, Sir John James
Eden, Captain Anthony	Monsell, Eyres, Com. Rt. Hon. Sir B.	Womersley, W. J.
Edmondson, Major A. J.	Moore, Lieut.-Colonel T. C. R. (Ayr)	Wood, Rt. Hon. Sir Kingsley
Elliot, Major Walter E.	Morrison, W. S. (Glos., Cirencester)	Young, Rt. Hon. Sir Hilton
England, Colonel A.	Nicholson, O. (Westminster)
Erskine, Lord (Somerset, Weston-S.-M.)	Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)	TELLERS FOR THE AYES.—
Everard, W. Lindsay	O'Connor, T. J.	Major the Marquess of Titchfield and Captain Wallace.
NOES.
Adamson, Rt. Hon. W. (Fife, West)	Arnott, John	Barr, James
Adamson, W. M. (Staff., Cannock)	Aske, Sir Robert	Benn, Rt. Hon. Wedgwood
Addison, Rt. Hon. Dr. Christopher	Ayles, Walter	Bennett, Sir E. N. (Cardiff, Central)
Aitchison, Rt. Hon. Craigle M.	Baker, John (Wolverhampton, Bilston)	Bennett, William (Battersea, South)
Alexander, Rt. Hon. A. V. (Hillsbro')	Baldwin, Oliver (Dudley)	Benson, G.
Angell, Sir Norman	Barnes, Alfred John	Birkett, W. Norman
Bondfield, Rt. Hon. Margaret	John, William (Rhondda, West)	Quibell, D. J. K.
Bowerman, Rt. Hon. Charles W.	Jones, Llewellyn-, F.	Ramsay, T. B. Wilson
Broad, Francis Alfred	Jones, J. J. (West Ham, Silvertown)	Raynes, W. R.
Brockway, A. Fenner	Jones, Rt. Hon. Leif (Camborne)	Richards, R.
Bromfield, William	Jones, Morgan (Caerphilly)	Richardson, R. (Houghton-le-Spring)
Bromley, J.	Jowett, Rt. Hon. F. W.	Riley, Ben (Dewsbury)
Brooke, W.	Jowitt, Sir W. A. (Preston)	Ritson, J.
Brothers, M.	Kedward, R. M. (Kent, Ashford)	Romeril, H. G.
Brown, C. W. E. (Notts, Mansfield)	Kelly, W. T.	Rosbotham, D. S. T.
Brown, Rt. Hon. J. (South Ayrshire)	Kennedy, Rt. Hon. Thomas	Rowson, Guy
Buchanan, G.	Kenworthy, Lt.-Com. Hon. Joseph M.	Salter, Dr. Alfred
Burgess, F. G.	Kinley, J.	Samuel Rt. Hon. Sir H. (Darwen)
Buxton, C. R. (Yorks. W. R. Elland)	Knight, Holford	Samuel, H. Walter (Swansea, West)
Cameron, A. G.	Lang, Gordon	Sanders, W. S.
Cape, Thomas	Lansbury, Rt. Hon. George	Sandham, E.
Carter, W. (St. Pancras, S. W.)	Lathan, G.	Sawyer, G. F.
Chater, Daniel	Law, Albert (Bolton)	Scurr, John
Church, Major A. G.	Law, A. (Rossendale)	Sexton, Sir James
Clarke, J. S.	Lawrence, Susan	Shepherd, Arthur Lewis
Cluse, W. S.	Lawrie, Hugh Hartley (Stalybridge)	Sherwood, G. H.
Clynes, Rt. Hon. John R.	Lawson, John James	Shield, George William
Cocks, Frederick Seymour	Lawther, W. (Barnard Castle)	Shiels, Dr. Drummond
Compton, Joseph	Leach, W.	Shillaker, J. F.
Cove, William G.	Lee, Frank (Derby, N. E.)	Shinwell, E.
Cripps, Sir Stafford	Lees, J.	Short, Alfred (Wednesbury)
Daggar, George	Lewis, T. (Southampton)	Simmons, C. J.
Dallas, George	Lloyd, C. Ellis	Sinclair, Sir A. (Caithness)
Dalton, Hugh	Longbottom, A. W.	Sinkinson, George
Davies, D. L. (Pontypridd)	Longden, F.	Sitch, Charles H.
Davies, Rhys John (Westhoughton)	Lovat-Fraser, J. A.	Smith, Ben (Bermondsey, Rotherhithe)
Day, Harry	Lunn, William	Smith, Frank (Nuneaton)
Denman, Hon. R. D.	MacDonald, Rt. Hon. J. R. (Seaham)	Smith, Lees-, H. B.
Dudgeon, Major C. R.	MacDonald, Malcolm (Bassetlaw)	Smith, Rennie (Penistone)
Dukes, C.	McElwee, A.	Smith, Tom (Pontefract)
Duncan, Charles	McEntee, V. L.	Smith, W. R. (Norwich)
Ede, James Chuter	McKinlay, A.	Sorensen, R.
Edmunds, J. E.	Maclean, Sir Donald (Cornwall, N.)	Stamford, Thomas W.
Edwards, E. (Morpeth)	Maclean, Nell (Glasgow, Govan)	Stephen, Campbell
Egan, W. H.	McShane, John James	Strauss, G. R.
Foot, Isaac	Mander, Geoffrey le M.	Sullivan, J.
Freeman, Peter	Manning, E. L.	Sutton, J. E.
Gardner, B. W. (West Ham, Upton)	Mansfield, W.	Taylor, R. A. (Lincoln)
Gardner, J. P. (Hammersmith, N.)	Marcus, M.	Taylor, W. B. (Norfolk, S. W.)
George, Major G. Lloyd (Pembroke)	Markham, S. P.	Thorne, W. (West Ham, Pla[...]stow)
George, Megan Lloyd (Anglesea)	Marley, J.	Thurtle, Ernest
Gibbins, Joseph	Marshall, Fred	Tillett, Ben
Gibson, H. M. (Lancs, Mossley)	Mathers, George	Tinker, John Joseph
Glassey, A. E.	Matters, L. W.	Tout, W. J.
Gossling, A. G.	Maxton, James	Townend, A. E.
Gould, F.	Messer, Fred	Trevelyan, Rt. Hon. Sir Charles
Graham, D. M. (Lanark, Hamilton)	Middleton, G.	Vaughan, David
Graham, Rt. Hon. Wm. (Edin., Cent.)	Mills, J. E.	Viant, S. P.
Gray, Milner	Milner, Major J.	Walkdan, A. G.
Greenwood, Rt. Hon. A. (Colne)	Montague, Frederick	Walker, J.
Griffith, F. Kingsley (Middlesbro' W.)	Morris-Jones, Dr. J. H. (Denbigh)	Watkins, F. C.
Griffiths, T. (Monmouth, Pontypool)	Morrison, Rt. Hon. H. (Hackney, S.)	Watson, W. M. (Dunfermline)
Groves, Thomas E.	Morrison, Robert C. (Tottenham, N.)	Watts-Morgan, Lt.-Col. D. (Rhondda)
Grundy, Thomas W.	Mort, D. L.	Wedgwood, Rt. Hon. Josiah
Hall, G. H. (Merthyr Tydvil)	Muggeridge, H. T.	Wellock, Wilfred
Hall, J. H. (Whitechapel)	Murnin, Hugh	West, F. R.
Hamilton, Mary Agnes (Blackburn)	Nathan, Major H. L.	Westwood, Joseph
Hamilton, Sir R. (Orkney & Zetland)	Naylor, T. E.	White, H. G.
Hardie, George D.	Newman, Sir R. H. S. D. L. (Exeter)	Whiteley, Wilfrid (Birm., Ladywood)
Harris, Percy A.	Noel Baker, P. J.	Whiteley, William (Blaydon)
Hastings, Dr. Somerville	Noel-Buxton, Baroness (Norfolk, N.)	Wilkinson, Ellan C.
Haycock, A. W.	Oldfield J. R.	Williams, David (Swansea, East)
Hayes, John Henry	Oliver, George Harold (Ilkeston)	Williams, Dr. J. H. (Llanelly)
Henderson, Right Hon. A. (Burnley)	Oliver, P. M. (Man., Blackley)	Williams, T. (York, Don Valley)
Henderson, Thomas (Glasgow)	Palin, John Henry	Wilson, C. H. (Sheffield, Attercliffe)
Henderson, W. W. (Middx., Enfield)	Paling, Wilfrid	Wilson, J. (Oldham)
Herriotts, J.	Palmer, E. T.	Wilson R. J. (Jarrow)
Hicks, Ernest George	Parkinson, John Allan (Wigan)	Winterton, G. E. (Leicester, Loughb'gh)
Hirst, G. H. (York W. R. Wentworth)	Perry, S. F.	Wise, E. F.
Hoffman, P. C.	Pethick-Lawrance, F. W.	Wood, Major McKenzie (Banff)
Hopkin, Daniel	Phillips, Dr. Marlon	Young, R. S. (Islington, North)
Horrabin, J. F.	Picton-Turbervill, Edith
Hudson, James H. (Huddersfield)	Pole, Major D. G.	TELLERS FOR THE NOES.—
Hunter, Dr. Joseph	Potts, John S.	Mr. Charles Edwards and Mr.
Isaacs, George	Price, M. P.	Charleton.
Jenkins, Sir William	Pybus, Percy John

Captain BOURNE

I beg to move, in line 6, at the end, to add the words:

"Provided that this rule shall not apply in respect of any income which falls within Case IV of Schedule D, as set out in the First Schedule to the Income Tax Act, 1918."

I will also argue the case of the next Amendment which stands in my name—in line 6, at the end, to add the words: Provided that this rule shall not apply in respect of any income which falls within Case V of Schedule D, as set out in the First Schedule to the Income Tax Act, 1918 —as both Amendments cover the same point. As I understand these two cases, Case IV and Case V, they relate to income which is asseesable for Income Tax in this country but which does not arise in this country and therefore cannot be deducted at the source. Presumably they are assessed on the income and they pay direct to the Inland Revenue. It is not deducted at the source. Are those people included under the Government scheme? I ask because there is an arrangement affecting the payment of double Income Tax. Will the arrangement of "three-quarters" and "one-quarter" have any effect upon the arrangements with regard to the question of double Income Tax? If those people are to be assessed under this scheme, the matter will be of some importance in regard to Imperial financial arrangements. I have put down the Amendments in order to obtain an explanation upon the point.

Lieut.-Colonel Sir A. LAMBERT WARD

I beg to second the Amendment.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence)

The answer to the point is somewhat different from that which the hon. and gallant Member has anticipated. This particular class of persons already pay in a lump sum on 1st January because they are not included in the two groups to which the concession was given in 1918. Therefore they are not affected by the proposal of the Government and they

will continue to do that which they have been doing all this time, which is, to pay in a lump sum on 1st January?

Sir DENNIS HERBERT

Does that also apply to Case V?

Mr. PETHICK-LAWRENCE

Yes.

Sir A. STEEL-MAITLAND

Are there any people who come under Case IV affected by Section 157?

Mr. PETHICK-LAWRENCE

Cases IV and V are not among those which were affected by the original Sub-section 157 of the Act of 1918. The relative words giving the concession are three: This sub-section applies in cases of tax charged under No. I or No. II of Schedule A and tax charged on any individual or firm under Schedule B in respect of lands occupied for husbandry only, and tax charged on any individual or firm under Schedule D, or the rules thereof "— and these are the important words— in respect of the profits or gains of any trade or of any profession or vocation, and tax charged on any individual in respect of any office or employment, whether under Schedule D or Schedule E, etc. That omits Cases IV and V, and therefore the concession did not extend to them.

Captain BOURNE

Is the Financial Secretary to the Treasury quite clear that people who have property in the Irish Free State would not come in? Perhaps he will consider that point between now and the Finance Bill.

Mr. PETHICK-LAWRENCE

I am prepared to consider it, but I do not think that the question arises.

Amendment, by leave, withdrawn.

Question put, "That this House doth agree with the Committee in the said Resolution."

The House divided: Ayes, 253, Noes, 175.

Division No. 236.]	AYES.	[7.36 p.m.
Adamson, Rt. Hon. W. (Fife, West)	Benn, Rt. Hon. Wedgwood	Brooke, W.
Adamson, W. M. (Staff., Cannock)	Bennett, Sir E. N. (Cardiff, Central)	Brothers, M.
Addison, Rt. Hon. Dr. Christopher	Bennett, William (Battersea, South)	Brown, C. W. E. (Notts, Mansfield
Altchiton, Rt. Hon. Craigle M.	Benson, G.	Brown, Rt. Hon. J. (South Ayrshire)
Alexander, Rt. Hon. A. V. (Hillsbro')	Bevan, Aneurin (Ebbw Vale)	Buchanan, G.
Angell, Sir Norman	Birkett, W. Norman	Burgess, F. G.
Arnott, John	Bondfield, Rt. Hon. Margaret	Buxton, C. R. (Yorks. W. R. Elland)
Aske, Sir Robert	Bowerman, Rt. Hon. Charles W.	Cameron, A. G.
Baker, John (Wolverhampton, Bilston)	Broad, Francis Alfred	Cape, Thomas
Baldwin, Oliver (Dudley)	Brockway, A. Fenner	Carter, W. (St. Pancras, S. W.)
Barnes, Alfred John	Bromfeld, William	Chater, Daniel
Barr, James	Bromley, J.	Church, Major A. G.
Clarke, J. S.	Lansbury, Rt. Hon. George	Ritson, J.
Cluse, W. S.	Lathan, G.	Romeril, H. G.
Clynes, Rt. Hon. John R.	Law, Albert (Bolton)	Rosbotham, D. S. T.
Cocks, Frederick Seymour	Law, A. (Rossendale)	Rowson, Guy
Compton, Joseph	Lawrence, Susan	Salter, Dr. Alfred
Cove, William G.	Lawrie, Hugh Hartley (Stalybridge)	Samuel, Rt. Hon. Sir H. (Darwen)
Cripps, Sir Stafford	Lawson, John James	Samuel, H. Walter (Swansea, West)
Daggar, George	Lawther, W. (Barnard Castle)	Sanders, W. S.
Dallas, George	Leach, W.	Sandham, E.
Dalton, Hugh	Lee, Frank (Derby, N. E.)	Sawyer, G. F.
Davies, D. L. (Pontypridd)	Lee, Jennie (Lanark, Northern)	Scurr, John
Davies, Rhys John (Westhoughton)	Lees, J.	Sexton, Sir James
Day, Harry	Lewis, T. (Southampton)	Shepherd, Arthur Lewis
Denman, Hon. R. D.	Lloyd, C. Ellis	Sherwood, G. H.
Dudgeon, Major C. R.	Longbottom, A. W.	Shield, George William
Dukes, C.	Longden, F.	Shiels, Dr. Drummond
Duncan, Charles	Lovat-Fraser, J. A.	Shillaker, J. F.
Ede, James Chuter	Lunn, William	Shinwell, E.
Edmunds, J. E.	MacDonald, Rt. Hon. J. R. (Seaham)	Short, Alfred (Wednesbury)
Edwards, E. (Morpeth)	MacDonald, Malcolm (Bassetlaw)	Simmons, C. J.
Egan, W. H.	McElwee, A.	Sinclair, Sir A. (Caithness)
England, Colonel A.	McEntee, V. L	Sinkinson, George
Foot, Isaac	McKinlay, A.	Sitch, Charles H.
Freeman, Peter	Maclean, Sir Donald (Cornwall, N.)	Smith, Ben (Bermondsey, Rotherhithe)
Gardner, B. W. (West Ham, Upton)	Maclean, Nell (Glasgow, Govan)	Smith, Frank (Nuneaton)
Gardner, J. P. (Hammersmith, N.)	McShane, John James	Smith, Lees-, H. B.
George, Major G. Lloyd (Pembroke)	Mander, Geoffrey le M.	Smith, Rennie (Penistone)
George, Megan Lloyd (Anglesea)	Manning, E. L.	Smith, Tom (Pontefract)
Gibbins, Joseph	Mansfield, W.	Smith, W. R. (Norwich)
Gibson, H. M. (Lancs, Mossley)	Marcus, M.	Sorensen, R.
Glassey, A. E.	Markham, S. F.	Stamford, Thomas W.
Gossling, A. G.	Marley, J.	Stephen, Campbell
Gould, F.	Marshall, Fred	Strauss, G. R.
Graham, D. M. (Lanark, Hamilton)	Mathers, George	Sullivan, J.
Graham, Rt. Hon. Wm. (Edin., Cent.)	Matters, L. W.	Sutton, J. E.
Gray, Milner	Maxton, James	Taylor, R. A. (Lincoln)
Greenwood, Rt. Hon. A. (Colne)	Messer, Fred	Taylor, W. B. (Norfolk, S. W.)
Griffith, F. Kingsley (Middlesbro' W.)	Middleton, G.	Thorne, W. (West Ham, Plaistow)
Griffiths, T. (Monmouth, Pontypool)	Millar, J. D.	Thurtle, Ernest
Groves, Thomas E.	Mills, J. E.	Tillett, Ben
Grundy, Thomas W.	Milner, Major J.	Tinker, John Joseph
Hall, G. H. (Merthyr Tydvil)	Montague, Frederick	Tout, W. J.
Hall, J. H. (Whitechapel)	Morley, Ralph	Townend, A. E.
Hamilton, Mary Agnes (Blackburn)	Morris-Jones, Dr. J. H. (Denbigh)	Trevelyan, Rt. Hon. Sir Charles
Hamilton, Sir R. (Orkney & Zetland)	Morrison, Rt. Hon. H. (Hackney, S.)	Vaughan, David
Hardie, George D.	Morrison, Robert C. (Tottenham, N.)	Viant, S. P.
Harris, Percy A.	Mort, D. L.	Walkden, A. G.
Hastings, Dr. Somerville	Muggeridge, H. T.	Walker, J.
Haycock, A. W.	Murnin, Hugh	Watkins, F. C.
Hayes, John Henry	Nathan, Major H. L.	Watson, W. M. (Dunfermline)
Henderson, Right Hon. A. (Burnley)	Naylor, T. E.	Watts-Morgan, Lt.-Col. D. (Rhondda)
Henderson, Thomas (Glasgow)	Newman, Sir R. H. S. D. L. (Exeter)	Wedgwood, Rt. Hon. Josiah
Henderson, W. W. (Middx., Enfield)	Noel Baker, P. J.	Wellock, Wilfred
Herriotts, J.	Noel-Buxton, Baroness (Norfolk, N.)	West, F. R.
Hicks, Ernest George	Oldfield, J. R.	Westwood, Joseph
Hirst, G. H. (York, W. R., Wentworth)	Oliver, George Harold (Ilkeston)	White, H. G.
Hoffman, P. C.	Oliver, P. M. (Man., Blackley)	Whiteley, Wilfrid (Birm., Ladywood)
Hopkin, Daniel	Palin, John Henry.	Whiteley, William (Blaydon)
Horrabin, J. F.	Paling, Wilfrid	Wilkinson, Ellen C.
Hudson, James H. (Huddersfield)	Palmer, E. T.	Williams, David (Swansea, East)
Hunter, Dr. Joseph	Parkinson, John Allen (Wigan)	Williams, Dr. J. H. (Llanelly)
Isaacs, George	Perry, S. F.	Williams, T. (York, Don Valley)
Jenkins, Sir William	Pethick-Lawrence, F. W.	Wilton, C. H. (Sheffield, Attercliffe)
John, William (Rhondda, West)	Phillips, Dr. Marion	Wilson, J. (Oldham)
Johnston, Rt. Hon. Thomas	Picton-Turbervill, Edith	Wilson, R. J. (Jarrow)
Jones, Morgan (Caerphilly)	Potts, John S.	Winterton, G. E.(Leicester, Loughb'gh)
Jowett, Rt. Hon. F. W.	Price, M. P.	Wise, E. F.
Jowitt Sir W. A. (Preston)	Quibell, D. J. K.	Wood, Major McKenzie (Banff)
Kedward, R. M. (Kent, Ashford)	Ramsay, T. B. Wilson	Young, R. S. (Islington, North)
Kelly, W. T.	Rathbone, Eleanor
Kennedy, Rt. Hon. Thomas	Raynes, W. R.	TELLERS FOR THE AYES.—
Kenworthy, Lt.-Com. Hon. Joseph M.	Richards, R.	Mr. Charles Edwards and Mr.
Kinley, J.	Richardson, R. (Houghton-le-Spring)	Charleton.
Lang, Gordon	Riley, Ben (Dewsbury)
NOES.
Acland-Troyte, Lieut.-Colonel	Balniel, Lord	Bird, Ernest Roy
Ainsworth, Lieut.-Col. Charles	Beamish, Rear-Admiral T. P. H.	Bourne, Captain Robert Croft
Albery, Irving James	Beaumont M. W.	Bowater, Col. Sir T. Vansittart
Amery, Rt. Hon. Leopold C. M. S.	Bellairs, Commander Carlyon	Boyce, Leslie
Astor, Maj. Hon. John J.(Kent, Dover)	Betterton, Sir Henry	Bracken, B.
Atholl, Duchen of	Bevan, S. J. (Holborn)	Brass, Captain Sir William
Balfour, Captain H. H. (I. of Thanet)	Birchall, Major Sir John Dearman	Broadbent, Colonel J.

Brown, Brig.-Gen. H. C. (Berks, Newb'y)	Hacking, Rt. Hon. Douglas H.	Purbrick, R.
Buchan, John	Hall, Lieut.-Col. Sir F. (Dalwich)	Pybus, Percy John
Buchan-Hepburn, P. G. T.	Hamilton, Sir George (Ilford)	Ramsbotham, H.
Bullock, Captain Malcolm	Hammersley, S. S.	Remer, John R.
Butler, R. A.	Hannon, Patrick Joseph Henry	Reynolds, Col. Sir James
Campbell, E. T.	Hartington, Marquess of	Richardson, Sir P. W. (Sur'y, Ch't'sy)
Carver, Major W. H.	Harvey, Major S. E. (Deven, Totnes)	Roberts, Sir Samuel (Ecclesall)
Castle Stewart, Earl of	Henderson, Capt. R. R. (Oxfd, Henley)	Rodd, Rt. Hon. Sir James Rennell
Cayzer, Sir C. (Chester, City)	Hennessy, Major Sir G. R. J.	Ruggles-Brise, Colonel E.
Cazalet, Captain Victor A.	Herbert, Sir Dennie (Hertford)	Russell, Alexander West (Tynemouth)
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)	Hills, Major Rt. Hon. John Waller	Salmon, Major I.
Chamberlain, Rt. Hon. N. (Edgbaston)	Hore-Belisha, Leslie	Samuel, A. M. (Surrey, Farnham)
Chapman, Sir S.	Howard-Bury, Colonel C. K.	Sandeman, Sir N. Stewart
Clydesdale, Marquess of	Hudson, Capt. A. U. M. (Hackney, N.)	Sassoon, Rt. Hon. Sir Philip A. G. D.
Cobb, Sir Cyril	Hunter-Weston, Lt.-Gen. Sir Aylmer	Shepperson, Sir Ernest Whittome
Cockerill, Brig.-General Sir George	Hurd, Percy A.	Skelton, A. N.
Colman, N. C. D.	Hurst, Sir Gerald B.	Smith, Louis W. (Sheffield, Hallam)
Colville, Major D. J.	Hutchison, Maj.-Gen. Sir R.	Smith, R. W.(Aberd'n & Kinc'dine, C.)
Conway, Sir W. Martin	Inskip, Sir Thomas	Smith-Carington, Neville W.
Courtauld, Major J. S.	Iveagh, Countess of	Smithers, Waldron
Cranborne, Viscount	Jones, Sir G. W. H. (Stoke New'gton)	Somorville, A. A. (Windsor)
Croft, Brigadier-General Sir H.	Kindersley, Major G. M.	Somerville, D. G. (Willesden, East)
Croom-Johnson, R. P.	Knox, Sir Alfred	Southby, Commander A. R. J.
Culverwell C. T. (Bristol, West)	Lamb, Sir J. Q.	Stanley, Lord (Fylde)
Cunliffe-Lister, Rt. Hon. Sir Philip	Lambert, Rt. Hon. George (S. Molton)	Stanley, Hon. O. (Westmorland)
Dalkeith, Earl of	Lane Fox, Col. Rt. Hon. George R.	Steel-Maitland, Rt. Hon. Sir Arthur
Dairymple-White, Lt.-Col. Sir Godfrey	Law, Sir Alfred (Derby, High Peak)	Stewart, W. J. (Belfast, South)
Davidson, Rt. Hen. J. (Hartford)	Leighton, Major B. E. P.	Stuart, Hon. J. (Moray and Nairn)
Davies, Maj. Geo. F. (Somerset, Yeovill)	Lewis, Oswald (Colchester)	Sueter, Rear-Admiral M. P.
Davison, Sir W. H. (Kensington, S.)	Llewellin, Major J. J.	Thompson, Luke
Duckworth, G. A. V.	Locker-Lampson, Rt. Hon. Godfrey	Todd, Capt. A. J.
Dugdale, Capt. T. L.	Locker-Lampson, Com. O. (Handsw'th)	Train, J.
Eden, Captain Anthony	McConnell, Sir Joseph	Tryon, Rt. Hon. George Clement
Edmondson, Major A. J.	Macdonald, Capt. P. D. (I. of W.)	Turton, Robert Hugh
Elliot, Major Walter E.	Maitland, A. (Kent, Faversham)	Vaughan-Morgan, Sir Kenyon
Erskine, Lord (Somerset, Weston-S.-M.)	Margesson, Captain H. D.	Wallace, Capt. D. E. (Hornsey)
Everard, W. Lindsay	Marjoribanks, Edward	Ward, Lieut.-Col. Sir A. Lambert
Falle, Sir Bertram G.	Merriman, Sir F. Boyd	Warrender, Sir Victor
Ferguson, Sir John	Milne, Wardlaw-, J. S.	Waterhouse, Captain Charles
Fielden, E. B.	Monsell, Eyres, Com, Rt. Hon. Sir B.	Wayland, Sir William A.
Fison, F. G. Clavering	Moore, Lieut.-Colonel T. C. R. (Ayr)	Wells, Sydney R.
Ford, Sir P. J.	Morrison, W. S. (Glos., Cirencester)	Williams, Charles (Devon, Torquay)
Forestier-Walker, Sir L.	Newton, Sir D. G. C. (Cambridge)	Windsor-Clive, Lieut.-Colonel George
Fremantle, Lieut.-Colonel Francis E.	Nicholson, O. (Westminster)	Winterton, Rt. Hon. Earl
Galbraith, J. F. W.	Nicholson, Cot. Rt. Hn. W. G. (Ptrsf'ld)	Withers, Sir John James
Ganzoni, Sir John	O'Connor, T. J.	Womersley, W. J.
Gault, Lieut.-Col. A. Hamilton	Oman, Sir Charles William C.	Wood, Rt. Hon. Sir Kingsley
Gilmour, Lt.-Col. Rt. Hon. Sir John	O'Neill, Sir H.	Young, Rt. Hon. Sir Hilton
Glyn, Major R. G. C.	Ormsby-Gore, Rt. Hon. William
Graham, Fergus (Cumberland, N.)	Penny, Sir George	TELLERS FOR THE NOES.—
Grattan-Doyle, Sir N.	Percy, Lord Eustace (Hastings)	Captain Sir George Bowyer and
Greene, W. P. Crawford	Peto, Sir Basil E. (Devon, Barnstaple)	Major the Marquess of Titchfield.
Grenfell, Edward C. (City of London)	Pownall, Sir Assheton

Resolution agreed to.