NEW CLAUSE.—(Deductions for expenses incurred during disability.) (Hansard, 11 July 1938)

§ Mr. H. G. Williams
I beg to move, "That the Clause be read a Second time."
I expect that this Clause will meet with a fate similar to that of the last. Nevertheless, I hope that I am blazing a trial for the time when there will be a little more money available and concessions can be made in respect of Income Tax allowances. The object of the new Clause is to deal with circumstances which arise when an Income Tax payer is subjected to heavy expenses owing to a prolonged illness which injures his capacity to earn. My hon. and learned Friend, in framing this Clause, took a moderate view, not wanting to bring in illnesses of short duration, but he did think that where there was prolonged illness there might be a case for the most exacting of all creditors to become less exacting. The man whom we have to pay whatever happens is the collector of taxes. Other people may be tolerant; the collector of taxes is not allowed to be tolerant; he cannot make any concessions. The landlord, much abused from the benches opposite—

§ Mr. G. Griffiths
Only the bad landlords.

§ Mr. Williams
The bulk of them are good and not bad.

§ Mr. Griffiths
Yes, that is so.

§ Mr. Williams
Thank you very much. I am the landlord only of the premises which I occupy, nobody pays me rent—oh yes, there is one person, and he pays promptly. The landlord, the tradesman, everybody, is considerate to the household in which there has been prolonged illness 1071 on the part of the wage earner or salary earner. The only one who is intolerant is that collective creditor the State. I am merely suggesting at this stage, again for the examination of the Treasury, and not with a hope that the concession will be granted to-night, that in cases of prolonged illness the cost of that illness might be regarded as a deductable expense. If there is wear and tear of industrial machinery the State takes that fact into account. I rejoice that this year the Chancellor of the Exchequer did increase the special allowance of 10 per cent. in rsepect of depreciation granted in 1931 by 20 per cent. Here I am merely suggesting that there should be some recognition of what I would call the depreciation of the human machine.
It is difficult to estimate what this concession would cost. No doubt the Treasury will put forward some figure, and by bringing in a lot of other things which hon. Members have thought of they may multiply the £100,000 which I had in mind to £2,500,000. That is a convenient device. I do not blame my right hon. and gallant Friend for bringing into account a lot of other people's Amendments which they have not yet tabled and adding the cost of them to mine, because, after all, the Financial Secretary has to do the best he can when the Chancellor is having some refreshment. It is not proposed that there should be an unlimited allowance, because the Clause provides that the deduction shall not exceed one-tenth of the taxable income.
As I have said, I do not expect to get this concession to-night. I am merely, on behalf of my hon. and learned Friend, submitting for consideration a real human problem, and I hope that in due course that human problem will receive the examination of the Treasury. In the days when I was a boy and the Income Tax was at 8d. all the greybeards were in distress because it was raised to 9d. The concession would not have mattered so much in those days, but things are different now that the standard rate of tax is 5s. 6d. in the £ The burden has become so oppressive to millions of people that these matters assume an importance which was never dreamed of in the days when I was a boy. It is because of the human tragedies which occur when a person who has been earning a fairly good 1072 income is suspended from earning, and may also have the great burden of an operation and a long period in a nursing home, that I honestly think that some part of the expense should be allowed as a deduction from income for the purposes of Income Tax. It is with a realisation of that kind of problem that I ask the House to give this Clause its sympathetic consideration.

§ Mr. Spens
I beg to second the Motion.
I very much doubt whether the people of this country realise what happens to a professional man at the present time when he has a really bad illness in the middle of the year. He is assessed to Income Tax on what he has earned during the previous year. He has his expenses to keep up, and though he may have saved something, he has to pay Income Tax out of what he has earned in the current year. If at the beginning of that year he goes down with a bad operation and a bad illness the situation he is put in in meeting Income Tax on a full year's income of the previous year, when he may be earning only a fifth of that income in the present year, is a very serious matter. The Revenue often meet these cases with the utmost consideration, but it is in the nature of a charity. I commend this new Clause, not, I agree, as one to be incorporated in this Finance Bill, but for the very serious consideration of the Chancellor in the future, on behalf of a class in the community on whom, I venture to think, the Income Tax falls more heavily than on any other class.

§ Captain Wallace
I think everybody in the House will appreciate the human case which has been put by my two hon. Friends. I can assure them that the case with which this Clause seeks to deal is one which is always present to the mind of the Chancellor of the Exchequer in the early months of the year, when he is naturally looking out for any hard cases to see if he can meet them. But as far as this particular Clause is concerned I must say I am surprised that a Clause drafted in such terms shoud be sponsored by any hon. Gentlemen of the eminence of my two hon. Friends. It seeks to give an allowance for "any increase of expenditure" incurred on account of any disability, without indicating the level of 1073 expenditure against which the increase is to be measured, and without defining what is meant by "disability," a term which is capable of very wide interpretation. I am bound to assume that the object of the Clause is to obtain a deduction from earned income on account of all expenditure, such as doctors' bills, nursing costs, medicines, convalescence costs etc., arising out of an illness or accident which has resulted in an earner being absent from work for a period of not less than three weeks.
However much one may sympathise with this case, it is quite impracticable to introduce into our system of Income Tax law and Income Tax relief an allowance for expenditure of this kind which cannot readily be checked. It would be difficult or impossible to tell whether the expense had been necessarily incurred. The form of expenditure is not uniform and must obviously vary according to the financial position of the person concerned. The amount of allowance for any given kind of disability would be greater for the man with a large income than for the man with a small income. The former would be able to employ more expensive doctors, and, with the io per cent. limitation, if he were earning £5,000 a year, he would be entitled to a deduction of the cost of his illness and a convalescent holiday of anything up to £450.
It would be impossible to put in a Clause of this kind into Income Tax law. The system of personal allowances and reliefs has been carefully built up, and takes account of the most important changes and chances of the taxpayer by means of a flat rate, but to suggest that you might spend 10 per cent. or indeed any particular percentage of your taxable income upon any object, however good, and then get relief in respect of that expenditure, would make the administration of Income Tax law almost impossible. Perhaps I might quote what the Royal Commission said in 1920 on this question: We have been asked to recommend allowances for expenses arising out of illness or disability, such as the travelling expenses of attendants of disabled persons or to give compassionate rebate to persons who are compelled to maintain and pay personal attendants; or special relief to disabled persons in view of the decreased earning capacity. These claims, while differing in degree, all arise out of the personal or domestic circumstances of the taxpayer, and, although we are conscious that in particular cases the operation of the 1074 general rule may result in individual hardship, we feel we cannot advise any general relaxation of the principles on which the tax is levied. In view of what my hon. Friends have said, they will probably be prepared to withdraw their proposal. I say perfectly frankly that, in view of the drafting of the Clause, it is impossible to make any estimate of the amount involved. I hope that at this time of night they may see fit to withdraw their Clause.

§ Mr. H. G. Williams
I did not expect that this Clause would get any further. We have had quoted against us the Report of the Royal Commission on Income Tax. I would only ask my hon. and gallant Friend whether all the other recommendations of the Commission have been carried into effect. I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.