CLAUSE 9.—(Higher rates of Income Tax for 1936

§ Mr. Tinker
This Clause deals with a class of persons to whom the hon. Member for East Aberdeen (Mr. Boothby) referred, namely, those who are in receipt of incomes above £2,000 a year. That these people are doing fairly well at the present time is shown by the fact that the Chancellor of the Exchequer expects to receive more in Surtax this year than he did before. Last year he got £53,500,000 from this source, but this time he is budgeting for £58,000,000, which seems to show that the number of people in this class is on the increase. I wish to suggest that here is a fine place in which to get more revenue. I suggest that the House of Commons has not, up to now, paid sufficient attention to the suggestion that the limit of £2,000 should be brought to a lower figure. I think it could easily be done and a greater amount of revenue derived from these higher incomes without any real hardship to anybody.
I have always held that there is no need for excessive fortunes remaining in the hands of the idle. In fact it would be an advantage to these people to take some of their wealth from them and utilise it in other directions. We argue a lot about 5s. in the £ Income Tax, but 1897 we ought to pay more regard to these higher incomes and take more from them than we are doing. If we did so we should only be fulfilling our duty to the people of the country. Up to the present this matter has passed without much comment, but when one realises the extremes in this country, the poverty which exists on the one hand and the great wealth on the other, I think it is time that something was done to deal with the situation. The hon. Member for East Aberdeen expressed some forebodings as to what might happen in regard to Income Tax, but I have heard that cry so often that I am growing tired of it. We had here one right hon. Gentleman who has now gone to another place and he was never tired of pointing out that if you taxed the rich you would drive them to other countries and they would take all their money with them. But they have not gone yet, because they know that this is the best place in the world for the rich man and they will not go, whatever you do.
I say that the time has come when this House will have to arrest the wealth going into so few hands, as it is doing, and leaving so many poor people. I understand that something like 100,000 people pay Surtax, and I want to know how many people there are with incomes between £1,500 and £2,000 a year. I have been trying to find out for myself, and some figures that I have been able to find back to 1932–33 seem to give the number as about 800,000. I think the Committee ought to know these things, because the time must come when taxation will have to be put on a steeper grade than it is at present at the higher levels. I have no intention of voting against the Clause, because if I did, it would mean that the rich men would get off for the time being, but if to-night I had any power to make the Surtax applicable to incomes of £1,500 and upwards, I should certainly do it, in the belief that I was serving the best interests of the country. I hope the Financial Secretary or the Chancellor of the Exchequer will give us some indication of the number of Surtax payers and, if he can, of the number that there would be if the limit was brought down from £2,000 to £1,500.

§ Major Dower
The hon. Member suggests that these people are idle and do 1898 not work, but, of course, that is absolutely nonsense.

§ Mr. Tinker
I did not say that. I said that it would be to their advantage if they had less of this wealth, and if what they had was distributed more evenly throughout the country. I did not use the word "idle" in regard to them, though it might have been in my mind.

§ Mr. Petherick
I am afraid I cannot agree with the hon. Member for Leigh (Mr. Tinker), who wishes to lower the Surtax limit. I wish, however, to deal with another point altogether. I think it would be really ungracious—in fact, almost churlish—to allow this Clause to pass and go upon the Statute Book without at least one voice being raised to congratulate all those responsible for its production on the naive and charming Clause which they have put before us. The Treasury officials, the Parliamentary draftsmen, and indeed, the printers, all deserve, I think, a meed of thanks, and I would even go so far as to congratulate my right hon. Friend the Chancellor of the Exchequer on the very choice and rare heirloom which, in common with other heirlooms, he has inherited. I do not wish to ask the Committee's leave to read the Clause, but if they will look at the Clause, they can hardly fail to be impressed by it. When first I read it over I thought it meant absolutely nothing at all, perhaps in my darkness and ignorance, but when I had read it over several times, I began to have some dim understanding and appreciation of its real and true merits. I believe that this is an attempt by the Parliamentary draftsmen to bring our Parliamentary language quite up to date. There are those who cannot fully appreciate Surrealist literature. It is an acquired taste, rather like modern art, music, and painting, but when I had read the Clause several times over I at last began to understand—at least, I thought I did—what it meant.
There are some Philistines who might claim that a simpler form of words should be used. For instance, the Clause might read something like this: "Surtax for 1936–37 will be the same as for 1935–36," or some other sordid and jejune form of words which would not, I am afraid, commend itself to the draftsman. The framers of the Clause in their wisdom and taste for literature have produced this noble 1899 example, such a perfect example of the art, that it would be sacrilegious to criticise it, but I will venture to make only one remark on it. At the end of the fifth line, I think the interest and excitement of the reader begins to flag. He has been worked up to this great pitch, almost fever pitch, of interest, and then the narrative begins to fall away. He gets left with a sense of emptiness, of anticlimax, almost of frustration. May I suggest to the Chancellor of the Exchequer that he considers this matter again with the possibility of repeating once or twice the fourth and fifth lines of the Clause? I hope that no one will misunderstand my motive in bringing this to the notice of the Committee. The Clause is a great monument of English prose which deserves to be imperishably enshrined in the treasury of our English literature, or, perhaps I should say, in the English literature of the Treasury.

§ Lieut.-Colonel Colville
My hon. Friend is wrong in supposing that this Clause means nothing at all. To the man with an income of over £2,000 it will mean that he will pay more than last year, and I hope that he did not lose interest before he read the whole of the Clause. The wording of the Clause is not new this year. It is in the same form as on previous occasions. It prescribes the rates for Surtax purposes for 1936–37, and those rates are rates exceeding the standard rates which are chargeable in respect of the excess of the total income of anyone who has an income of over £2,000. I hope that my hon. Friend feels that I have added to the literary value of the Clause. The rates for Surtax purposes for 1935–36 were rates exceeding the 1935–36 standard rate, which was 4s. 6d. in the £. The rates now proposed for 1936–37 are rates exceeding by the same amount the 1936–37 standard rate, which was 4s. 9d. Whereas the rates last year ran up to a maximum of 12s. 9d. in the £, the rates now proposed run up to a maximum of 13s. on the higher incomes.
The hon. Member for Leigh (Mr. Tinker) expressed the view that if the Surtax payers were increased in number there would be an increasing revenue without doing harm to the population in general. I would remind the hon. Mem- 1900 ber that Surtax payers have had no relief from the additional 10 per cent. put on in 1931. He asked me the number of Surtax payers. They are approximately 90,000. As I have indicated, the rates run up to, in the highest case, 13s. in the £. The hon. Member is wrong in supposing that Surtax payers are all idle persons; a great many have earned incomes. I hope that with these words the Committee will pass the Clause. There is no change in the amount of the Surtax, but it comes on the top of a higher standard rate of Income Tax.

§ Mr. Emmott
Are the Committee to understand from the figure which the right hon. and gallant Gentleman has just given that in recent years there has been a considerable diminution in the number of Surtax payers? He gave the number of persons assessed to this tax as 90,000. In the latest year for which statistics are given in the Blue Book, the year 1929–30, the figure given is 109,749. There is a very considerable difference between that figure and the figure given to the Committee, and it might be of interest if the right hon. and gallant Gentleman could say whether, in fact, there has been a decline.

§ Lieut.-Colonel Colville
I have here a more recent publication than the one which the hon. Member has consulted. In 1930 the number of Surtax payers was 104,000; in 1931, 93,000; 1932, 86,000; 1933, 83,000; 1934, 85,000; arid the estimate I am giving, to the nearest available date, is approximately 90,000.

§ Mr. Ellis Smith
Those figures are very illuminating, and support the stand taken by the hon. Member for Leigh (Mr. Tinker) about this Clause. The whole question of the distribution of wealth in this country arises on this Clause and I wish to make a few observations about those 90,000 people who are receiving at least £40 a week each.

The Chairman
The hon. Member has given me an intimation that he intends to go a good deal beyond what are the limits of debate on this Clause.

§ Mr. Smith
The Clause deals with the tax, and in line 8 there is a reference to individuals with an income of more than £2,000 a year.

The Chairman
Yes, but the sole question involved is the rate at which this tax shall be charged for a particular year.

§ Mr. Smith
I think the question arises whether we are in favour of the figure remaining at £2,000, and we here wish to suggest that it is altogether too high, and that the tax should be payable on incomes of considerably less than that. We are strengthened in that conviction by the enormous increase which is taking place in the cost of living. We feel there will have to be increased expenditure on the social services during the next 12 months to meet the case of old people who are having to manage on pensions of l0s. a week, of the unemployed who are receiving 15s. a week, and those who have to depend on the Unemployment Assistance Board. This level of £2,000 will have to be drastically reduced in order that the wealth of the country can be more fairly distributed. I hope the Chancellor of the Exchequer will give serious consideration to the need for indicating very definitely to those people who are well fixed in life that not only will they have to pay their share towards maintaining the defences of this country, but that if what is happening brings about an increase in the cost of living they may be called upon for a further contribution when he introduces his Budget next year. I want to indicate the tendency with regard to indirect and direct taxation, which is that the people dealt with in this Clause are being relieved of their share of taxation. Many of them are removing to the Channel Islands in order to avoid their responsibility. In our view, the time has arrived when the House of Commons should deal with this question. We are not prepared to allow this to go by without issuing a warning that we think the time has come when the charge for social services should be increased in order that the people who receive pensions or unemployment assistance may have their allowances increased accordingly.

CLAUSE 9.—(Higher rates of Income Tax for 1936–37.)