HC Deb 30 September 1931 vol 257 cc430-47

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. ARNOTT

I want to call attention to the incidence of taxation as altered by the proceedings of this Government. At Question Time to-day I called attention to the very misleading White Paper which has been issued by the Government. It was intended, I suppose, as an answer to certain criticisms upon the taxation of higher incomes imposed in this Budget that were made by the hon. Member for West Leicester (Mr. Pethick-Lawrence) and by the hon. Member for Chesterfield (Mr. Benson) on the Second Reading. It is intended to convey the impression that the taxation on the higher incomes is quite as big proportionately as on the lower incomes, and in order to prove that, there are set out in the White Paper, in the final column, the increases of taxation imposed at the present time, but I would point out that they are not the increases in taxation imposed by the present Government, but combine the increases imposed by this Government and by all the Governments since the right hon. Member for Epping (Mr. Churchill) was Chancellor of the Exchequer.

In order to show the difference, I will take the extreme case given at the end of the White Paper. On an income of £100,000 the Income Tax and the Super-tax combined is now £61,490, which seems, of course, a very large sum, and at the end the increase is given as £14,333 5s., which is rather more than 10 per cent., but when we examine the figures closely, we find that the bulk of that increase was imposed 18 months ago, and that the real increase imposed by the present Government is £6,852, or 6.8 per cent. Therefore, the taxation imposed on the wealthy people is very much lower than the taxation imposed on those who are not quite so well off. The same is true of the £50,000 income. The White Paper is deliberately intended to make the casual reader believe that there is an increase of £6,000 on an income of £50,000. I am taking the income of a married couple with three children. As a matter of fact, the net increase is only £2,726 12s. 6d.—an increase of about 4 per cent. We might go through the whole of the figures in this Paper and find the same results.

The present Government have shown a remarkable aptitude for sheltering themselves behind the responsibilities of their predecessors, and of claiming all the credit of their predecessors. If we look upon the Chancellor of the Exchequer as a sort of Jekyll and Hyde, you can choose whether the Socialist or the Tory in him is the Jekyll. The policy which he pursued when he was the Socialist Chancellor of the Exchequer was to increase the taxation of the well-to-do, and particularly that of the Super-tax payer, and to decrease the taxation of the poorer sections of the community. Bit by bit he removed indirect taxes and gave increased allowances to the Income Tax payer of the lower grades. At the same time, he increased the ordinary Income Tax and to a greater degree the Super-tax. That may be a good or bad policy. We think it is a good policy, and hon. Members opposite say it is bad. We have an echo of their feelings in the speech of the Noble Lord on the preceding Clause. He warned us that the Income Tax payer did not really pay the Income Tax at all—

Earl WINTERTON

I did not say that. I said that one result of an increase in Income Tax is that many employers are no longer able to employ the number of people that they did before.

Mr. ARNOTT

The point the Noble Lord made is that Income Tax is imposed on industry and not on the person who is nominally alleged to pay it. That is to say, Income Tax, instead of being taken out of his private income which he spends on his private enjoyment, is taken out of the industry out of which he usually draws his income. It must be taken out of that industry in one of three ways. He either fails to invest money in that industry which he otherwise would do, and in that case checks development; or he adds the Income Tax to the price of the commodities which he sells, in which case it lessens his sales; or he takes his Income Tax out of other expenses, chiefly out of wages, and in that ease it comes out of the working people. Unless he does one of these things, Income Tax cannot possibly hurt industry. It cannot hurt industry as industry. Suppose a wealthy coalowner is compelled to give up a holiday on the Continent, that does not bit industry in this country. It can only hit industry if he expects to get his Income Tax out of the coal before he uses his income for his private use.

If that can be argued in regard to Income Tax, it cannot be argued in regard to Super-tax. The Super-taxpayer does not have Super-tax stopped at the source. He has to be assessed for it certainly. In the ordinary course of events, it would come out of income, and it can only- affect industry if industry is paralysed because it is starved of a sufficient supply of fluid capital. Will anyone say that industry is paralysed because the tax has been so heavy that nobody has any money to invest, although profitable avenues for investment are available? If that argument is sound, nearly everything in which we have been engaged in the past two years has no value whatever, because if there is insufficient capital available for carrying on industry, the obvious thing is to carry on with much more drastic economies than are suggested in the Government's proposals. But no one seriously believes that.

The increase of taxation is opposed by the party opposite, or it is lower than it otherwise would be, because they realise that heavy Income Tax and Super-tax does reduce the portion of the national dividend that goes to wealthy people and makes available money for social services. They know that perfectly well. When you compare the proposals in the Finance Bill, and particularly the increases in the Super-tax and the higher rates of Income Tax with the increases that are imposed on other sections of the community through taxation and by means of the Economy Bill, it is perfectly clear that the claim for equality of sacrifice is a farce. The policy advocated by the Chancellor of the Exchequer since he first entered this House, and for years before he ever entered the House, to carry out which many of us worked hopefully to get him into the House, is that a great deal of improvement could be won for the people merely by taxation and the transference of the surplus incomes of the few to meet the needs of the many. That may not commend itself to the right hon. Gentleman's present supporters, but that was his special contribution to the Socialist movement. That was a policy he pursued as Chancellor of the Exchequer in the 1923–24 Government and which he pursued as Socialist Chancellor in the late Labour Government.

That policy is now entirely reversed, and I am surprised that his new colleagues have not the courage of their con- victions. If it prejudices the industry of the country so much to put heavier burdens upon the Super-tax payer, why do they not show in black and white how the extra taxation is crippling industry. Why do they hide it in this White Paper and not show it plainly without giving Members the trouble to make sums in subtraction. Why not show the taxes that exist now and the taxes that will exist under this Finance Bill? They ought to be proud of what they are doing, but they are ashamed of it, and that is why they take this method of hiding it.

Sir JOHN POWER

It is universally recognised that Income Tax and Super-tax are a grave burden, and there is hardly any need to go into that question. The amount collected is to -be enormous, and it is useless to insist that that is not a grave burden on industry. Do hon. Gentlemen opposite think that all this money comes out of the air? We are raising in taxation an amount equal to one-third of the national income; the whole of the national income has to be worked for, and the amount required for State purposes has to be produced annually by the efforts of the population. I find it difficult to understand why hon. Members opposite cannot realize that all taxation of this kind is a detriment to industry. It causes unemployment, and the higher your taxation the higher your ratio of unemployment becomes. You cannot take money from a man who pays wages without affecting the fortunes of the men who receive wages. That is the simple proposition.

The second proposition is that the giving of careers in this country to the younger people is becoming rather a serious problem, because it is now evident to most young people that their future in the country is becoming heavily circumscribed. We are suffering from an export of brains, and that is a serious thing for the future. A great many young people come to me for advice, and they all have the same tale to tell—that they see no future for themselves because, if they attain a position of responsibility with a reasonable salary, the 'best part of that salary will go in taxation for purposes for which they do not approve. Whether they are right or wrong, that is the condition of things to-day, and to maintain that this heavy taxation to which we are submitting now, with as much cheerfulness as we can, is a good thing for the country and industry, is absurd. Do hon. Gentlemen opposite say that the taxes that are imposed on company reserves, which would otherwise go to provide fresh and new machinery for greater employment and efficiency, is an advantage? We on this side do not. We think that this is a burden which we shall be forced to bear by the emergency of the country, but we hope that some day industry will be released to a certain extent from these heavy burdens. Until some relief is given to industry, I cannot see how we are going to compete with our foreign rivals.

7.0 p.m.

Mr. PETHICK-LAWRENCE

The hon. Member for Wimbledon (Sir J. Power) has forgotten that we are not discussing Income Tax, but Super-tax, and when he talks of the burden that falls upon company reserves, he is really discussing something which is not strictly germane to the Clause which is under discussion. I do not rise to argue that the burden imposed under Clauses 6 and 7 involves no sacrifices. Everyone recognises that any additional taxation must of necessity imply a sacrifice, but what we on these benches say, and what we have said throughout, is that the slogan on which the Government appeal to the country of "Equality of sacrifice for all" is not carried out in the taxation here being imposed. In the earlier stages of these proposals, on the Ways and Means Resolutions and on the Second Reading of the Finance Bill, I made certain comparisons, and my figures were challenged by hon. Members opposite who said that they were inaccurate. I very much dislike having my figures challenged, and I have taken the trouble of carefully going into them again. What I said at the time was that, so far as the man with £5,000 a year was concerned, the additional burden imposed on him by this Finance Bill was a smaller percentage of his income than in the case of a man with £500, and that the burden imposed on the man with £500 was a smaller percentage of his income than the burden which fell upon the civil servant with £150, owing to the various proposals of the Government, or upon the unemployed.

I have worked out the figures, and let us see what the facts are. Take, first of all, the case of a single man with an income of £5,000. He is called upon to face an additional burden under this Bill of £150, or 3 per cent. of his income. The single man with £500 a year is called upon to face an additional burden of £21, or 4 per cent. of his income. So that it is undoubtedly true that the effect of the Super-tax and Income Tax on a man with £5,000 a year is a smaller proportion of his income than that imposed on the man with £500 a year. When you come down to the burden imposed on the civil servant, it works out at 5 per cent. and on the unemployed at 10 per cent. of their income. So far as the single man is concerned, I was then fully justified in the statement I made that it was not a question of equal sacrifice. If you consider the married man without children, you get slightly varying figures, but the contention I made is much the same. When you come to the case of the married man with three children, it is quite true that on a £500 a year income the married man is not paying a large increase, but, if you go a little higher, to £600 or £700, and compare it with £6,000 or £7,000, you will find that with the much larger income the sacrifice is very much less.

The ground on which hon. Members opposite question my figures is that they propose an arbitrary method of reckoning the sacrifices involved. Instead of taking the proportion of the whole income, they propose to take the proportion of the income that is left. I believe that is the reason why they dispute my figures. Of course, that is an entirely new method of reckoning a sacrifice of this kind. If you are going to take the sacrifice on that part of his income which is left after taxation, if you are going to do that with the direct taxpayer, you have got to do that throughout the scale and to do it, too, when you are dealing with the workmen and the unemployed. In their cases you must take into account the indirect taxation that falls upon them. As we all know, the greater part of the burden on the wealthy people is the direct taxation, and the greater part of the burden on the poorer class is the indirect taxation. We must take that into account but that is not all. This House has imposed on the people of this country a number of other burdens. We have imposed upon them the premiums for unemployment insurance and for other things, and all those have got to be taken into account. You will get a different result if you include those. I would go further than that and say that, so far as the unemployed man is concerned, you must bear in mind the rent he has to pay and the necessities of life that he must face. If you add all that, you will discover that a 10 per cent, cut in unemployment benefit is not 10 per cent, of his margin, hut 50 per cent. or 100 per cent., or even more than that. If you include all that, my argument still stands.

But even if you take the whole income of the working man and pay no attention to indirect taxation, to his rent, or to other burdens he has to pay, what have you then? If you take the position simply by subtracting taxation from the income, you find this result. Take a single man with £5,000 a year. You are asking him in this Bill to make a sacrifice which only just exceeds 4 per cent. of the income which was left, whereas the additional burden that you are imposing on the single man with £500 is 4½ per cent. Compare that with the burden imposed on the civil servant with £150 a year of over 5 per cent, or on the unemployed of over 10 per cent. It is, therefore, clear that, even on that artificial reckoning which hon. Members opposite have sought to apply to these provisions, the principle of equality of sacrifice, which the Government profess to have carried out, is not carried out in this Bill.

Major ELLIOT

It is worth while to say immediately that we continue to challenge the figures of the hon. Member for West Leicester (Mr. Pethick-Lawrence). We continue to challenge his percentages, the basis of his conclusions, and the conclusions he draws. Our argument against them is absolutely borne out by the figures which he has brought forward. It appears that his calculations are wrong, because he says that the percentage on a figure of £5,000 is just over 4 per cent.

Mr. PETHICK-LAWRENCE

Three per cent.

Major ELLIOT

I was being more generous to him than he was. I thought he had at least abandoned his ridiculous fallacy that in counting a man's income you must count the bit the tax gatherer had already taken as well as the bit he himself enjoys.

Mr. PETHICK-LAWRENCE

I said the other was ridiculous reckoning, but even on that it is 4 per cent. If you do not abandon that method, you should take off the indirect taxation from the poorer people.

Major ELLIOT

I shall deal with both these points, and I shall disprove them, and I shall go on to the indirect taxation and disprove that. This figure of 3 per cent., he says, is an arbitrary basis. It may be an arbitrary basis to say that a man cannot spend the money which the tax gatherer has got, but it is a very true basis. He says then that on that arbitrary basis the calculation is not 3 per cent. but 4 per cent. The calculation is inaccurate, because it is not 4 per cent, but 4.9 per cent. or nearly 5 per cent. The £500 a year man, he says, is 4.6 per cent. He says that the £5,000 a year man pays less. It is not less, but it is greater.

Mr. PETHICK-LAWRENCE

I think the hon. and gallant Member is taking the last column, which is the increase not imposed under this Bill but since 1929. There can be no doubt about the figure, because the increase of a single man with £5,000 a year is set out perfectly clearly here as the difference between 21,313 and £1,465, which is £152. Even if you start with the net income that the taxpayer has, he is left £3,700. I challenge the hon. Gentleman arithmetically when he says that is practically 5 per cent.

Major ELLIOT

I take up that challenge that the hon. Gentleman makes. A man last year with £5,000 paid Income Tax and Super-tax of £1,350. The net income available was £3,650. He is now called upon to pay a further sum—

Mr. PETHICK-LAWRENCE

I am talking about the earned income. The figures are given in the White Paper, and show that the total for Income Tax and Super-tax is £1,313. The hon. Gentleman is not reading the White Paper.

Major ELLIOT

The figures I am taking are the figures with regard to investment income.

Mr. PETHICK-LAWRENCE

I said earned income.

Major ELLIOT

I was giving the hon. Member the figures most favourable to his own case—the figures of the rentier, about whom we hear so much. The figures show that the man is called upon to pay a further sum of £178 not out of £5,000, which he does not get, but out of £3,630, which is what he gets. On that basis the percentage of additional sacrifice is 4.9 per cent.

Mr. PETHICK-LAWRENCE

The hon. Gentleman has changed over from the basis I was taking to the invested income. I am perfectly willing to do that if he will do that with the man with £500 a year, for in that case he will find—

Major ELLIOT

Obviously, when we are dealing with these complicated tables, unless by a lecture with a blackboard, we shall never come to a complete agreement.

Mr. ARNOTT

Will the hon. and gallant Member apply the same principle to deal with Estate Duties?

Major ELLIOT

I am going to deal with the hon. Member also. What I am saying quite definitely and without any qualification or hesitation is that the hon. Member stated that the extra tax on an income of £5,000 is a 3 per cent. tax on the income left after the tax gatherer. I said that it was not 4 per cent., but 4.9 per cent.

Mr. MUGGERIDGE

Different factors.

Major ELLIOT

It is possible that he was using one income and I was using the other.

Mr. MUGGERIDGE

A different basis.

Major ELLIOT

It shows the great difficulty of dealing with those questions at all. I say, first of all, that you have got to take the income that was left, and calculate on that. Secondly, if you take that basis, the argument which the hon. Member for West Leicester put forward does not hold water on the basis even of arithmetic.

Mr. PETHICK-LAWRENCE

Let me take his own figures. I will take invested income instead of earned income if he likes. I thought that earned income was fair, but, taking invested income on his own basis of a single man who has got £5,000 and of the single man who has got £500, he will find—if I am correct as I think I am—that the man with £500 was called upon to make a greater sacrifice than the man with £5,000.

Major ELLIOT

We will leave it at that. I have given the sum three times. I have no desire to delay the Committee by giving it again.

Mr. MUGGERIDGE

Disprove it.

Major ELLIOT

I have disproved it completely. I have disproved the figures put forward by the hon. Member that the extra sacrifice on a man with £5,000 a year is 3 per cent. I have disproved that completely.

Mr. PETHICK-LAWRENCE

I cannot allow that statement to pass. The hon. and gallant Member has not disproved it at all. The figures I gave were for earned income. He has taken unearned income and not earned income; but he has not disproved the essential point that, whether it is earned income or investment income, the fact remains that the sacrifice you are asking of the taxpayer is greater in the case of the £500 a year man than of the £5,000 a year man—in percentages.

Major ELLIOT

I thought we had at last come to an agreement, but now it appears that we have not completely done so. Whether you take an earned income of £5,000 or an unearned income of £5,000, to make a basis of calculation of the size of the levy by leaving out altogether the fraction of the income—the very large fraction—which has been removed by the tax gatherer vitiates the argument.

Mr. PETHICK - LAWRENCE

Leave that out, and still I am proved right.

Major ELLIOT

That is the first point I wish to make. The hon. Member said we have got to take into account indirect taxation as well. I can only say that the figures which we have taken out for the taxation upon the man with a small income show that for the lower ranges of earned income the total tax is actually less upon him now than it was in 1925–26. In the year 1931–32 the total tax upon a household is £2 1s. 6d., whereas in 1925–26 it was £3 2s. 3d. That was on an income of £150. For an income of £200 it is still less—£2 3s. in 1931–32 and £3 4s. 9d. in 1925–26. In the case of a £500 a year income, although the total tax is higher to-day, it is not vitally higher than it was in 1925–26. In that year the figure was £13 10s. 4d., for the household, and it is £17 4s. 9d. for 1931–32. Surely these figures disprove the contention of the hon. Member for West Leicester that the burden laid upon the higher ranges of income is not adequate to the situation in which the country finds itself—that is, on his narrow analysis dealing only with last year. Now I come to the extraordinary contention of the hon. Member for South-West Hull (Mr. Arnott), who had the audacity to put forward the suggestion that no account of the previous enormous increases in Income Tax, Super-tax and Death Duties should be taken into consideration. Why not?

Mr. ARNOTT

For the simple reason that we are dealing now with an emergency—so we are told—and in considering the extra taxation imposed as a result of that emergency we are not warranted in taking into account the previous taxation.

Major ELLIOT

That shows that I was well justified in using the word "audacity" in speaking of his argument. Does he think that the emergency suddenly burst up under the floor of the House of Commons when the National Government was formed, or even when his own Government were running away?

Mr. ARNOTT

Yes, certainly.

Major ELLIOT

Then if we took the brains of the hon. Member and pounded them with a pestle, it would be in vain to try to make him change his mind.

Mr. ARNOTT

Let the hon. and gallant Member ask his own Chancellor of the Exchequer, and he will say the same thing.

Major ELLIOT

I could quote chapter and verse from speech after speech of the Chancellor of the Exchequer for the on- rush of the emergency in which we find ourselves. The Chancellor of the Exchequer, in speech after speech, on the Floor of the House of Commons, in the country, in the City, everywhere, called attention to it, and at the Labour meeting—

Mr. ARNOTT

He did not call attention to it in 1930.

Major ELLIOT

The Chancellor of the Exchequer not only called attention to it, but actually said that he did not think industry could stand more taxation, and he was rebuked by hon. Members on the mountain up there. They are all compatriots of mine, and I know where they are looking. In the first Budget he introduced he said that industry ought to know what the size of the burdens to be laid upon it in the near future would be in the way of direct taxation, and that he hoped these were the furthest increases he would have to lay upon industry, and thereafter he called attention not merely to the general position, but to the specific difficulty with which we were faced through these vast increases in the unemployment figures. He said time and again that no Budget could stand an increase such as was being laid upon it by the enormous increases of the Treasury liability owing to the cost of transitional benefit and the burden coming upon the direct taxes of the country from that source. Does the hon. Member deny that? Does he question that?

Mr. ARNOTT

I certainly question the implication that the emergency now is precisely the same as it was then. Otherwise, why have we got the National Government?

Major ELLIOT

The hon. Member for South West Hull questions the fact that the emergency now is precisely the same as it was then, just as a man who had gone over Niagara might say, "This is not the same waterfall that I started to go over. It is not the same; it is a great deal worse." The situation is graver, but the efforts put forth on the brink of the precipice to prevent himself going over were a drain on his energy which leaves him with less energy to get out of the rapids. The huge drafts we made on the resources of the country in direct taxation in the years immediately before have to be taken into account, and are taken into account by every serious student of economics when considering how much we can call upon the country to pay in direct taxes in the near future.

Mr. ARNOTT

Then why does not the hon. and gallant Member take 1913 instead of 1925?

Major ELLIOT

Does the hon. Member for South-West Hull really intend to delude us with the suggestion that this particular crisis began in 1913?

Mr. ARNOTT

No.

Major ELLIOT

No; and I really think we are indebted to the hon. Member for South-West Hull for bringing out an aspect of the situation which otherwise might not have been presented to us, and that is that the demands which have to be made upon the resources of this country to meet this situation began in the first Budget which the Chancellor of the Exchequer introduced. As everybody knows, it was one of the accusations against the right hon. Member for Epping (Mr. Churchill). [An HON. MEMBER: "De-rating!"] The right hon. Member for Epping had done his utmost by expedients, which were condemned in many parts of the House, to avoid a great new increase of direct taxation. When the present Chancellor of the Exchequer came in, he said we must deal with the present situation and he put on heavy increases of direct taxation to meet the coming emergency, and later he said, "When the emergency is on us, it will be almost impossible to increase direct taxation." The hon. Member for West Leicester laughs. I remember that statement distinctly.

Mr. ARNOTT rose

The DEPUTY-CHAIRMAN

We cannot carry on the Debate in this way.

Major ELLIOT

The hon. Member for South-West Hull has done a service in calling attention by his fallacies to an aspect of the situation which otherwise might have been omitted in this House, although that fallacy is continually repeated in the country. The fallacy is that you can make unlimited drafts upon the direct taxpayer and then, when the crisis comes, find as much in the money box as there was before you made those par- ticular drafts. That is recognised in every part of the House to be a, fallacy. The White Paper brings out, as the White Paper must bring it out, that increases of direct taxation cannot be related only to the taxation of this year but to the increases of previous years. The White Paper is absolutely justified—every figure of it, and is necessary to a correct analysis of the situation in which we find ourselves. What that shows is that the huge drafts which have been made by the direct taxation, and particularly the higher ranges of direct taxation, are drafts which were only justified by reason of the critical emergency in which the country finds itself, and are drafts of an order to which the taxpayers and those who are calling upon them to make this sacrifice will look back in future years as some of the heaviest calls which have ever been made upon the taxpayers of this or any other country.

Mr. BEAUMONT

I intervene only to try to get the Committee away from the fallacies of the hon. Member for South-West Hull (Mr. Arnott) and the financial juggling of the hon. Member for West Leicester (Mr. Pethick-Lawrence), because, frankly, I do not think it matters very much whether a man with £5,000 is paying 1 per cent. more or less than the man with £500. I have always disliked all this talk about equality of sacrifice, because I do not believe there can be equality of sacrifice or of anything else in this world. The hard workers, the good citizens, the patriotic, the beneficent of all classes will pay the hard burdens, and the skrimshankers and the spongers of all classes will get away. Nothing will ever alter that. I do not think this Clause depends on the question of percentages or juggling with figures, or whether somebody is to pay a little more than somebody else. The question is whether this money is being raised from the best source from which it can be raised. Hon. Members opposite have got some glorious theory that more money could be raised by higher Super-tax, and Income Tax. I except, of course, the hon. Member for Burslem (Mr. MacLaren), who has got some glorious theory that it could all come out of the land. People who say that we can get more money out of the taxpayer simply do not know what they are talking about. I doubt whether the increased taxation on the large taxpayers which we have felt ourselves able to impose will produce the yield which the Chancellor of the Exchequer desires. The large taxpayers of this country have a large number of people dependent upon them—their employés of all sorts and descriptions. An hon. Member opposite shakes his head, but they have, and believe me I speak as one of them. I know perfectly well how this increased direct taxation is going to be met. It is going to be met by discharging employés.

Mr. W. J. BROWN

Shame!

Mr. BEAUMONT

The hon. Member for West Wolverhampton (Mr. W. J. Brown) cries "Shame," but that is the only way in which they can raise the money to pay the taxation. I am perfectly prepared to accept—though I do not agree with it—the view of hon. Members opposite that it is wrong that employés should be dependent upon rich people. At any rate, that state of things exists. Of course, employés have to live, and they have to eat and drink just the same as the people about whom hon. Members opposite made such piteous pleas last, week. If by high taxation we throw out of work the people who are engaged in our manufactures, those people will have to be kept by the national Exchequer. It is no use collecting more money from one class if by so doing you throw more people out of work, and place additional burdens on the Exchequer. I have frequently disagreed with the proposals of the Chancellor of the Exchequer, and no doubt I shall disagree with him again in the future. I do not pretend that this Budget contains all the proposals which I would like to have seen in it, but, taking the Budget all round, the Chancellor of the Exchequer has gone to the sources where he is most likely to get the money with the least amount of trouble. I submit that the Clause which we are now discussing is not the unfair thing which hon. Members opposite make it out to be, and I think it holds out a reasonable hope of getting in the money with as little unnecessary hardship to everyone concerned as possible.

Mr. TINKER

In a previous Debate I heard the Chancellor of the Exchequer state that the direct taxpayers could not stand any increased taxation, but that view was never accepted by the right hon. Gentleman's followers in the Labour party, and we have always claimed that a larger sum of money ought to be raised by direct taxation. It has been argued in this Debate that taxation put upon the Super-tax payers and other rich people will have the effect of forcing people out of work, but that has always been the cry every time the Super-tax, the Income Tax and the Death Duties have been increased. I think that the balancing of the Budget could be achieved much better by a larger amount of direct taxation, and that is why we are opposing this particular Clause. We think this Budget ought to be balanced by taxing those who possess wealth. Money is not exhausted in this country, and figures have been produced showing that there are vast sums of accumulated wealth in the hands of the rich people. In times of stress, while the poor are suffering an unfair burden, the Chancellor of the Exchequer ought to have taxed more the people who are wealthy. I do not suppose that we shall make much difference in regard to the result of this Debate by our voices, and we recognise that the voting will be against us, but we cannot miss this opportunity of letting the Chancellor of the Exchequer and the people behind him know that we have, on every occasion, fought for the principle of more direct taxation and less indirect taxation.

Mr. MacLAREN

In the Debate on this Clause hon. Members seem to have been wandering into a sort of maze, and I have listened to the views expressed by some of my colleagues with a certain amount of apprehension. It seems to be the opinion of some hon. Members that when it is necessary to raise taxation all that it is necessary to do is to look about for people with money, and levy taxation upon them without considering what the ultimate consequences may be. That policy is one which has long been associated with almost every political party. The idea seems to be that if a man makes an income it is the function of the State to find out what he is making, and levy a tax on him in proportion to his income. It seems to be assumed that if a man has money he is a person who should be spotted by the State and immediately sent off for execution by this particular weapon of taxation.

The question arises whether this tax will prove to be injurious to industry. Every tax you put upon wealth means a hindrance to the production of more wealth. Where does all taxation come from? All taxation is a deduction from wealth. An hon. Member opposite has said quite truly that when heavy taxation is imposed upon industry under the present canons of taxation sooner or later the worker feels the back-wash, because the blows of taxation are passed on to the lowest man in society. You may call high taxation by whatever name you like, but it is a deduction from the wealth produced by the hands and the brains of the workers of this country. I remember some of the speeches made by the Chancellor of the Exchequer in which he was very enthusiastic about the placing of heavy penalties on large incomes, and he was always in favour of doing something in the form of adjusting wealth by heavy taxation on high incomes. It is quite true that people with high incomes can generally manage to devise means by which they can pass on heavy taxation to other people. It may be true that the taxation which we are now discussing may have the effect in many instances of throwing more people out of work. In my view, there are only two sound principles upon which you can levy taxation—

Whereupon, the GENTLEMAN USHER OF THE BLACK ROD being come with a Message, the CHAIRMAN left the Chair.

Mr. SPEAKER resumed the Chair.

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