HC Deb 19 June 1935 vol 303 cc504-9

If any person who is assessable to Income Tax proves to the satisfaction of the Commissioners of Inland Revenue that during the year of assessment he had a relative living with him who had been denied, wholly or in part, unemployment allowance under Part II of the Unemployment Act, 1934, or public assistance, on the ground that the relative was being maintained wholly or partly by him, he shall be entitled to a deduction of fifty pounds in respect of his assessment.—[Mr. T. Williams.]

Brought up, and read the First time.

11.23 p.m.


I beg to move, "That the Clause be read a Second time."

This Clause may almost be regarded as a "hardy annual." During the Committee stage of the Bill I have heard the Chancellor's replies to the submissions that have been made to him, but I think that in this case he will have no substantial reasons to advance against accepting the Clause. It is designed to help the person maintaining a relative who has been denied unemployment assistance in whole or in part because of his having been maintained by one or more persons within the home. This Clause has been moved on three occasions. I recall that, when it was moved in 1932, the then Financial Secretary expressed profound sympathy with its object, and promised to go carefully into the matter and ascertain exactly what the Treasury might be able to do. In 1933, when a similar Clause was moved, the Financial Secretary again expressed sympathy with its object, but pointed out that the wording of the Clause might not have the desired effect, and he said it might create certain anomalies.

The Clause suggests that, where anyone is maintaining an unemployed person who has either been denied any unemployment assistance or has only been granted a small sum, the person who is obliged to maintain him should be entitled to a deduction of £50 in consideration of the compulsory maintenance of the unfortunate person who happens to be unemployed. Either last year or in 1933 the Financial Secretary to the Treasury suggested that surveyors of taxes were called upon to exercise a great deal of sympathy where such a case as this was discovered, and said that a surveyor might regard an aged person who was unemployed, and was denied unemployment assistance because of the income probably of a son, as being incapacitated through old age. If in such a case the person was unlikely to obtain employment, the surveyor of taxes might be permitted to concede him the old age dependant's allowance, namely, £25. He also said that in the case of a son maintaining the home where the father was unemployed, and there were brothers and sisters, it might be possible for the surveyor of taxes to regard the brothers and sisters as dependent children.

We do not think that that method of dealing with this problem is the right one. First of all, it must be illegal. It cannot be legal until it becomes part and parcel of a Finance Act. The Government apply the means or household test, and they say to any person who happens to be receiving a wage of, say, £3 10s. or maybe £4, £4 10s. or £5 per week, should there be one or other, father or son, unemployed for a certain period, the one must be maintained by the other. Clearly, where the Government have applied the means test to that extent, they ought not to assess for the purposes or Income Tax the sum which must go to maintain the unemployed person for whom no assistance has been made available.

I know that the Chancellor of the Exchequer is fully cognisant of every argument advanced in favour of this proposed new Clause, and also that the Financial Secretary on two occasions has submitted that he is fully in sympathy with the object in view and has suggested two things. He suggested, first of all, that it is almost administratively impossible because of the fluctuation of the periods that a man or woman may be in or out of work. He told us on one occasion, for instance, that the surveyor of taxes would have to assess for a period of six months, three months or six weeks, or for some period less than 12 months, and that it would involve a great deal of clerical work to keep pace with the in-and-out of work all who come within the means test. We intend the new Clause this year to include public assistance since the same arguments apply. It may be that the administrative difficulty is almost insuperable, but the same Government that applied the means test ought at least to find a means of mitigating any anomaly previously unforeseen, but which now is clearly observable by everybody. If as a result of the fluctuations of employment they find that a fixed sum of £50 may be too much, £50 being 100 per cent. in excess of the dependants' allowance of £25, then it is one of those problems which the Treasury ought to find a means of solving. If they say that where a son is unemployed the father must maintain him out of his earnings, then clearly they cannot expect the father to pay Income Tax on the moneys that have been expended on the maintenance of the son. In the other case, where the father is unemployed and the son is employed, and the sum is sufficient to warrant the unemployment assistance committee in denying the parent unemployment assistance, they ought not to call upon the son to maintain the father and at the same time to exact from the son Income Tax on that proportion of his income which has gone to maintain his unemployed parent.

I do not think that the case need be argued further. Clearly it is a case with which the Chancellor of the Exchequer ought to have dealt during the past two years. There has been time to study the question and to have found a way of dealing with it, but not a way whereby the Income Tax surveyor is left wholly in charge to determine what he thinks should be done, whether right or not. You might have an Income Tax surveyor in Birmingham who was very generous and sympathetic and who would make all the allowances which the Financial Secretary stated in 1933 might be made, but you might have one in Sheffield or elsewhere who was not nearly so generous or sympathetic and would make none of those allowances. Where a case has been established the Chancellor of the Exchequer ought to find ways and means of at least remitting a sum equal to the amount withheld by the unemployment assistance committee as a result of the earnings of one member of the household. For these reasons and on the strength of the justice of the case I move the Amendment.

11.32 p.m.


I should like to support the Amendment: particularly for the reasons which I have previously advanced when the matter has been under discussion. I do not think that there can be any lack of sympathy in any quarter of the House with the object of the Clause. It is a very great hardship to those who have been obliged by the operation of the means test to support relatives for a longer or shorter period and then be called upon to pay Income Tax in respect of the income which they have already spent on a wholly worthy object. I have known many cases of people who for a long period have very willingly supported relatives who have been unfortunate enough to be unemployed, but their attitude has been changed when, having exhausted the whole of their resources in this way, they have suddenly been called upon to meet a substantial demand in regard to Income Tax.

My hon. Friend referred to the suggestion made on a previous occasion by a Financial Secretary to the Treasury, that the taxing authorities might deal as leniently as they possibly could with people, within the rules, but in a very large number of cases that have come to my notice they have not been successful in exempting the persons called upon for tax. I think that they have carried out the suggestion and have done the utmost within the limits of the law to meet these hard cases, but the fact remains that there are quite a number of cases in which it is quite impossible for them to meet the difficulty within the provisions of the law. There are technical difficulties in the way of making exemptions in respect of annual assessments with regard to these fluctuating charges, but it should not be beyond the power of the Treasury to find some method by which these cases, the justice of which is admitted, can be exempted from this tax.

11.37 p.m.


The hon. Member who moved the new Clause with his customary fairness stated my case, in reply, almost as well as he stated his own. He mentioned one of the principal difficulties in accepting the Amendment, but did not suggest any remedy. He simply said that it should not be beyond the wit of so wise a Government as the present to find a reply to a question to which he himself could not give an answer. But apart from the administrative difficulty the Amendment itself would create fresh anomalies. The hon. Member reminded us that under the present law an Income Tax payer who was supporting a dependent relative, aged or infirm, was entitled to the benefit of £25, but under his proposal, if the dependent relative is neither aged nor infirm but merely unemployed he would be entitled to the benefit of £50. That obviously would be an anomaly; it would be unfair. Further, many people are supporting relatives in similar circumstances, who are not capable of qualifying for unemployment benefit, one who has been in clerical employment. They are just as much a burden on their supporter and have probably just as little hope of getting employment again as many others. A similar Amendment was moved last year by the hon. Member for Colne Valley (Mr. Mallalieu) and during that discussion it was suggested that those responsible for unemployment assistance should take into account the payments which an Income Tax payer made in supporting a relative as part of the expenses of the household. On that occasion the hon. Member for East Fulham (Mr. Wilmot) said: I understood him to say that the public assistance authorities will be enjoined under the Bill to have regard to the tax upon a man's income in assessing the amount which he can be called upon to pay. Does that mean that they are to be instructed by the Minister to regard only the net income as income and not the gross income? If that is the meaning of the Minister's statement, the case which has been put by those who put forward this Clause has been largely met. If the Commissioners are required to have regard only to net income after the payment of tax, what we want will be aehiered."—[OFFICIAL REPORT, 12th June, 1934; col. 1586, Vol. 290.] The Unemployment Assistance Board have recently considered this question and have definitely decided that where in determining the need of an applicant for unemployment allowance payments of Income Tax by a member of the household is claimed as a deduction from earnings it will be allowed as a special expense in the assessment of household resources. I think that that has gone far to meet the point raised, and I hope my hon. Friends will be content with that this year.


Is that in force at the present time?



Question, "That the Clause be read a Second time," put, and negatived.