§ I come to one or two minor matters which will be contained in the Finance Bill. First it will provide for the extra Income Tax allowances for wear and tear of plant and machinery, to which I have already mace allusion, and which seem to have passed out of public memory in recent weeks. I am quite certain that when this comes into operation it will be of considerable benefit to industry. The next item is also one of interest to industry. It has been pointed out by their organised representatives that in a time of prolonged depression, such as that through which we have been passing, and from which I hope we are going now to emerge, traders are liable to be penalised because the allowances for wear and tear take priority over the carry forward for losses. That priority is not always unfavourable to the trader, but there are many cases in which it may deprive him of a deduction for Income Tax purposes which otherwise would have been allowed. Accordingly, I am putting in the Finance Bill a provision to ensure that every trader is given the allowances in the order most favourable to him.
§ The next point concerns a change that was made in last year's Finance Act, transferring to the Board of Inland Revenue the power of appointing collectors of taxes. That step was an essential preliminary to the reorganisation of the tax collection service on modern lines. That work is in process now, and I think it has gone far enough to enable me to say that the new system is not only showing itself to be more economical and more efficient but also more con- 1430 venient to traders than the old. But in order that it may be completed, and completed as rapidly as possible, it is now necessary to provide reasonable terms of compensation for those members of the existing staff for whom no place can be found under the new system or whose interests will be detrimentally affected. Accordingly, I am putting a Clause in the Bill which will deal with that point.
§ My last point is one which arises out of the inequitable position springing from a recent decision in the courts of law, a decision that the pensions of certain retired employés are not chargeable to Income Tax unless they are paid under contract and are legally exigible by the pensioners. I am sure that everyone will agree that all pensioners should be treated alike in this respect, whether their pensions are voluntary or contractual, and I am proposing to put that on a proper footing in the Finance Bill.
§ Having disposed of these matters, I now come back to revenue. The Committee will realise, I am sure, from the position I have disclosed, that I have no opportunity of giving relief this year to the Income Tax payer. I am afraid that he will find little consolation in the reflection that the hard necessity which has enforced this decision must have afforded much mental relief to hon. and right hon. Members who were so much disturbed a little while ago as to the distribution of an imaginary surplus. The fact is that the path of financial stability is not only hard and stony but long and weary, and, although we may now begin to see the light between the trees we have still far to go before we can emerge into easier ways. But at least the path may be made less arduous by mutual aid.
§ I have already spoken of the wonderful response made by the taxpayer last January, but there is one feature of the national effort on that occasion which I want to mention now with particular appreciation. A number of local authorities and certain industrial concerns were public-spirited enough to undertake themselves to pay Income Tax for their employés, and allow their employés to pay them back by instalments. Altogether there were about 100 arrangements of that kind. It generally took the form of the employer finding the whole or part of the money and then recovering it from 1431 the employé by deductions from the monthly payments of his remuneration. In that way not only was the tax secured to the Exchequer, but the burden of the incidence on the employé was materially eased. There is no question that the demand for the major part of the Income Tax in one lump sum does weigh very heavily upon small households where there are no considerable reserves of cash, and any system which enables the payment to be spread over several months is bound to afford relief to the taxpayer.
§ Unfortunately, it is impossible, for administrative reasons, to collect Income Tax by a number of instalments, and, therefore, the only way to secure a spread-over is to arrange, through the medium of the employers, for deductions from the monthly payments. I think it would be in the public interest that schemes of this kind should form a definite and permanent feature of our tax system. I want to make an appeal to local authorities and to large industrial concerns to come into arrangements of this sort. Of course, they would be purely voluntary. They would only be made with the assent of the employer and would only extend to such of the employés as desired to take advantage of it, but there is one important difference which I would propose to make from the special and temporary arrangements that were made last year. I do not propose to ask the employer to find the money in advance. I only propose to ask him to pay over to the Revenue what he has already actually deducted from the employé. The sort of idea is that if you take the instalment payable in January, the spread-over should be extended over all the six months, from October to March. The employer would, of course, hand over to the Revenue the amount of the tax which he had collected from the employé, at dates to be arranged between the 1st January and the end of March. A similar arrangement would apply for the July instalment.