§ 6.24 p.m.
§ Mr. RHYS DAVIES
I beg to move, in page 17, line 21, after the word "shall," to insert the words:in the case of any person whose total income from all sources does not exceed seven hundred and fifty pounds.This Amendment, I am sure, will rather astonish the Chancellor of the Exchequer coming from the Opposition, because it is indeed a most helpful proposal so far as the Government are concerned. Nearly every other Amendment to the Budget which has been proposed from any side of the House has been for the purpose of taking away some revenue from the Chancellor, but this Amendment will put millions of pounds into his pocket, and if that is not helping him I do not know what help he requires. When the right hon. Gentleman introduced the Budget he made this statement: 1776I particularly sympathise with those living on comparatively small incomes to whom this payment of three-quarters in one lump in January comes at a particularly difficult time.We are dealing in this Clause with the change which the Chancellor of the Exchequer is making from the practice that has recently prevailed of the Income Tax payer paying 75 per cent. of the amount due in January and 25 per cent. in July. The right hon. Gentleman in the Budget is now equalising the situation and has provided that payment shall in future be made on a 50–50 basis. The Amendment I am proposing would have the effect that a man in receipt of an income of £750 per annum or over would not enjoy the benefit of the change which is now being made by the Chancellor of the Exchequer. The Chancellor ought to accept the Amendment because, as he said in his speech, he has particular sympathy with those persons with small incomes. I do not know what a small income means to the Chancellor of the Exchequer, but to the Majority of Members on this side of the Committee £750 per annum could not be regarded as a small income. When, however, he came to consider what this equalisation of payments on a 50–50 basis would cost, the-right hon. Gentleman said:I found to my dismay that it would involve a loss of revenue of £12,000,000.He qualified that statement later on by saying: 1777It was true that it would not be a genuine loss but would only be a postponement of revenue."—[OFFICIAL REPORT, 25th April, 1933; col. 62, Vol. 277.]That is exactly what will happen in equalising the payments on a 50–50 basis, but we feel that the State is entitled to call upon all Income Tax payers whose income is over £750 a year to continue to pay on the plan that has been in operation during the last few years. The Chancellor of the Exchequer has complained of the great difficulty in balancing his Budget, but ii he accepts this Amendment all his difficulties will be removed. If he wants to pay the American Debt he can do so provided he accepts this Amendment. At any rate he will be able to pay part of it—I must qualify my statement to that extent, because I do not remember the exact amount that is due, and I am not alone in not knowing the amount that we owe America. It depends, I suppose, on the fluctuations of the dollar and its relation to sterling. But I will not be drawn into a discussion of high financial problems. I should like to know how many persons are involved below the £750 Income Tax limit, and how many above that limit; I am sure the Treasury officials will be able to pass that information on to the Chancellor of the Exchequer. The Chancellor of the Exchequer would be well advised to accept this Amendment. He made the statement that the total sum to the revenue would remain the same whether 75 per cent. was paid in January and 25 per cent. in July, or whether payment was made on a 60–50 basis, but if he accepted this Amendment he would have the use of £12,000,000 for the first six months in the year, which he would not get on a 50–50 basis. To have the use of enormous sums of ready money must be an advantage to the Treasury. I have heard it said that if you invest several millions you can live fairly comfortably on the interest accruing therefrom for a day or two, and therefore to have the use of this money at an earlier period, say for the first six months of the year, on the lines suggested in the Amendment, would be of great benefit to the Exchequer.
§ 6.31 p.m.
§ Mr. TINKER
I support the Amendment. I rather anticipate the reply that will be made to it, because I have been 1778 looking up the Finance Bill Debates of last year, and I find that we then moved a new Clause in the opposite sense to what is now proposed—to do away with the three-quarters instalment for all incomes—and I read the reply made on that occasion by the present Minister of Agriculture, who put forward the argument that the thing could not be done because the money was required. As against that, I put up this argument. We have put down certain Amendments and new Clauses which would require the expenditure of money, and the Chancellor of the Exchequer will probably tell us that there is no money available to do what we are asking for, and that our proposals would unbalance the Budget, and therefore cannot be entertained. We want by this Amendment to release a certain sum of money so that the Chancellor of the Exchequer will have something to spare when we come to make other proposals.
Those in receipt of big incomes must now have got over the difficulty and the hardship which was experienced at first when this method of paying Income Tax was introduced. When we have to pay a new demand we always grumble, but we gradually become used to it and accept it as in the ordinary course of things. The people with smaller incomes with whom we are more closely in contact, have felt this demand very keenly. It has been very hard upon them to pay three-quarters of their tax round about Christmas time. We agree with the Government in granting the concession to those with the smaller incomes, but we do not agree with it in the case of the larger incomes. As a result of our Amendment there would be some surplus, though I have not been able to get out the exact figure, and money would be available which could be spent to better advantage under our proposals than under the Government's present proposals. It may appear contradictory that we should now bring forward something which we opposed last year. I am trying to put forward arguments to show why we are doing that. It is in order that there shall be money available when we bring forward our other proposal, and I do not think that the Committee can well resist that line of argument. The Financial Secretary will probably be ready with the argument about what we did last time, but I do not think he will 1779 have thought about my second line of argument as to releasing this money for better purposes.
§ 6.35 p.m.
§ The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)
The hon. Member who moved this Amendment told us that it was one of the Amendments moved from those benches which would definitely be helpful to the Exchequer, and he anticipated that I should welcome it. His knowledge of the classics will remind him of the line about fEarlng the Greeks even when they bring gifts, and I have some suspicion of the hon. Member's motives. I feel inclined to doubt whether it is for the purpose of helping the Government that he is putting forward this suggestion, and I am confirmed in that suspicion by the speech of the hon. Member for Leigh (Mr. Tinker). He is evidently under the misapprehension, which I think is shared by the Mover of the Amendment, that the money which would be released if the Amendment were accepted would be available every year for the purpose of bringing in some other Measures which hon. Members opposite might desire. Let me say at once that this is a non-recurring item, and if the money were released by withdrawing this concession from some of the Income Tax payers, it could not be used to finance any sort of recurring expenditure.
There are two objections to this Amendment. The first is that it is entirely contrary to all principles of Income Tax. The principle of Income Tax is that the tax is graduated according to a man's income and his family responsibilities. That graduation is effected by means of different rates of tax and also by various allowances which Income Tax payers are entitled to receive. When you have made that graduation you have assessed as nearly as you can the different proportions of contribution which should be made by different taxpayers who have different incomes and different family responsibilities. To introduce a new source of differentiation and to say that, in addition, there shall be a graduation in relation to the dates on which the tax is to be paid, would be something entirely new and would ignore the fact that the whole differentiation has already been made. The second objection is that the proposal would be impracticable even if 1780 desirable. Income Tax is assessed upon a man's ordinary income, and also on the income from which tax is deducted at the source. The income from which the tax is deducted at source is of course income received in the current year. Therefore, it would not be possible to find out the people who were to come under this differentiation until the end of the year in which the differentiation was to occur. The hon. Member will see, therefore, that it is not practicable. That perhaps is the minor reason of the two, and the Major reason I have already advanced.
§ 6.39 p.m.
§ Sir STAFFORD CRIPPS
I am afraid that neither of the arguments put forward by the right hon. Gentleman is convincing. As regards practicability, it is just as practicable to do this as to give any other allowance to a person assessed for Income Tax. When the time came for demanding the three-quarters of the tax, anybody whose total income was shown by his assessment to be less than £750 would be entitled to claim a rebate on that payment, and would only have to pay one-half. It would be a perfectly easy arrangement from the administrative point of view. As regards his second point, the right hon. Gentleman gave that away in his Budget speech when he said that he particularly sympathised with those living on comparatively small incomes. If his argument were right that the whole adjustment between different classes of Income Tax payers was made by reason of family allowances and so forth, he surely would have sympathised with all Income Tax payers and not with the small Income Tax payer in particular. He knows that although these adjustments theoretically make the tax fair for everybody, those with large incomes find it easier to pay Income Tax than those with very small incomes, and that the system of collecting three-quarters in January fell particularly hardly upon those with small incomes. The man who had not reserves with which to buy Christmas presents and so forth was very hardly hit.
The right hon. Gentleman admits that that was what caused him to look in the bush and to find "the ram caught in the thicket." He caught the ram in order 1781 that he might sacrifice it in the interests of the small taxpayer—the poor child— and not in the interests of the Super-tax payer or the more grown-up individual. As far as we can make out, this Amendment would mean that a large sum would be available, not, it is true, for relief of recurring taxation, but for such purposes as development work in the distressed areas. That is a vital matter at the present time, and something on which this money, whether it is recurrent or not, could be well spent. It could be spent on Capttal or semi-Capttal works; it would attract no interest and therefore impose no increased burden on the State. [HON. MEMBERS: "Or slum clearance."] Or slum clearance. In fact, this would be an ideal sum with which to do work of that sort because none of the usual arguments against borrowing money for these purposes could be applied to it. It would not be a question of borrowing; it would be something, as the Chancellor said, like a ram caught by the horns in a thicket. It would be there, available, and would not jeopardise the future finances of the country. We feel that this is not a matter to be lightly brushed aside, and we shall certainly support the Amendment in the Lobby.
§ 6.43 p.m.
§ Mr. J. JONES
The right hon. Gentleman took occasion to refer to his classical knowledge, but, not being a classical student, I did not follow him very well in his reference. I wonder, however, if he has ever read one of the classics of English literature, "The Merchant of Venice," in which there is a certain character called "Shylock" who was willing to sacrifice a man's life in order to achieve his object. I do not pretend to be an Income Tax payer in the sense in which the term is used in the Finance Bill. I happen to be one of those who get a little assistance by being allowed to pay it in instalments. But I consider that this is a reasonable Amendment. It seeks to take nothing from the Exchequer. It only asks that those should be relieved who find it a serious problem at the beginning of each year to face the responsibility which the Government have placed upon them The payment of these instalments may be all right for those who have money to burn—like some of my hon. Friends on these benches. [HON. MEM- 1782 BERS: "Hear hear!"] Well, if they have, they burn more midnight oil than money. In this Amendment we are anxious to do a good turn to the middle class, who have always been looked upon by hon. Members opposite as the backbone of the country and as the people who have made the country what it is—and what is it?
As one of the possible beneficiaries under this Amendment, I would say that we are only asking you to realise that, after all, people can only pay when they have got the money. Do you want to force people into debt? The ordinary man included in this Amendment needs to borrow money to meet his Income Tax demands. [An HON. MEMBER: "Come over here !"] No, I had enough of your persecution when I was an ordinary labourer to know exactly what going; on your side means. I was born in hostility to it, and I will carry on being hostile. I am supporting this Amendment on behalf of those who would not vote for me if I gave them £l for every vote they gave. They are congenital opponents of mine, born for the purpose. I am doing my best to support the Amendment because it gives fair-play to the Majority of those who back you. They do not support us, and we are supporting those who are against us.
Surely, on those grounds the right hon. Gentleman ought to be a bit more soft in his answers and not fly to the classics to defend himself. He has not lived up to his reputation as a friend of the middle class. I remember reading a speech of his noble father's, in which he championed the interests of the middle class, the small ratepayer who was the backbone of his Birmingham policy, and in which he said that everything that they made out of their municipal experiments in Birmingham was going to relieve the small tradesmen and people of that kind of the financial claims that might be made against them by the municipal authorities. We are asking for the same thing to-day on a national ground. The right hon. Gentleman's father cleared the slums of Birmingham. It was a scheme similar to this in principle, if not in detail. The money he saved on the swings he spent on the roundabouts, and all the boasting that has been made in the City 1783 of Birmingham has been based upon the kind of policy which we are adumbrating in this Amendment. We ask you to level up those who are least able to bear the burden, to let them pay exactly the same
§ amount eventually, but to give them this opportunity of paying it not all at once.
§ Question put, "That those words be there inserted."
§ The Committee divided: Ayes, 40; Noes, 284.1785
§ Clause 25 (Continuance of allowance for repairs under 13 & 14 Geo. 5. c. 14, s. 28) ordered to stand part of the Bill.