§ Before I deal with the major financial problems of the year, there are certain miscellaneous matters of which it would be convenient for me to dispose at this stage. The £4 per cwt. duty on hops has been in existence since the control introduced during the last war ended in 1925. It expires in August next. It has had a valuable effect in stabilising the home market, and those concerned are in agreement that it should be renewed. After consultation with my right hon. Friend the Minister of Agriculture, I propose, therefore, to renew it for a further four years, subject in all respects to the same conditions as before.
§ The Committee will also remember that when the Finance Bill of July was being debated, the question was raised of the 1313 application of the Purchase Tax to medicines subject to Medicine Stamp Duty. It was pointed out that this involved a tax upon a tax, and comments were made upon the Medicine Stamp Duties themselves, which, as my predecessor told the House in 1939, had become administratively unworkable, and which it is highly desirable to repeal on that ground. I undertook, before the introduction of the next Finance Bill, to see whether the parties could be got together to hammer out some reasonable solution of the position. I am glad to be able to inform the Committee that the various interests concerned with the Medicine Stamp Duties, assisted by my hon. and gallant Friend the Member for the Lonsdale Division of Lancashire (Sir I. Fraser), have come together and have reached an agreement. I have consulted my right hon. Friend the Minister of Health on the matter, and, as a result, I am in a position to announce that the Medicine Stamp Duties will be repealed, and that my right hon. Friend, in accordance with the understanding which has been reached, will as soon as possible introduce legislation, the object of which will be to maintain a fair balance between the interests of the pharmacists and those of other vendors. The repeal will come into operation from 2nd September, so as to allow reasonable time for disposal of stamped stocks. We shall part, therefore, with the Act of 1802 and other Acts on this matter, which in process of time have become a museum-piece of administrative complexity. The cost of this repeal will be £640,000 this year, and £840,000 in a full year.
§ There are three matters in connection with Income Tax to which I should refer. The first concerns the taxation of farming profits. The Committee will recall that last August, in answer to a question put by my hon. and gallant Friend the Member for Epsom (Sir A. Southby), I stated that provision would be included in this year's Finance Bill to modify the present system, under which farmers are taxed on the conventional Schedule B basis, by-reference to the annual values of their farms, which often fall very far short of their actual profits. I propose that individual farmers whose lands exceed £300 in annual value should in future be assessed under Schedule D, like traders generally, by reference to their actual profits.
1314§ The second matter is one with which I dealt in February in reply to a question by my hon. Friend the Member for Eccles (Mr. Cary), when I undertook to propose, for the purposes of Income Tax and National Defence Contribution, a similar allowance to that provided for the purposes of Excess Profits Tax in respect of loss incurred in providing additional buildings, plant and machinery for the war effort. A Clause to that effect will be included in the Finance Bill.
§ The third matter is in connection with relief, granted originally under the second Finance Act of 1939, to individuals whose earned incomes have been substantially reduced by war conditions. I propose to continue this relief for the coming year.
§ Other Amendments of the taxation law which I propose to make in the Finance Bill include a provision that no deduction shall be allowed in the computation of profits for taxation purposes in respect of any payments made by a trading concern, by way of insurance or otherwise, in respect of death or injury of employés from enemy action. The Committee will remember that when I announced last December the scale of compensation that the State proposed to give in respect of personal injuries, I made it clear that the Government was opposed in principle to systems of group insurance against war risks; and the provision in the Finance Bill is directed to ensuring that such schemes shall not be financed at the expense of the Revenue. Provision will also be made in the Finance Bill for adjusting the taxation law to meet the case of businesses that may be subject to a scheme on the lines outlined in the recent Command Paper, for the concentration of production in the hands of nucleus concerns. This will generally be directed to relieving the nucleus concern from any liability to tax in respect of any part of its profits which may be paid to the displaced concern but it is necessary also to provide that the displaced concern will be chargeable on the profits that it receives and, for that reason, a Resolution is necessary.
§ In regard to Estate Duty, I have a provision to propose as to the: position of war gifts. Under the existing law, any gift made for public or charitable purposes within a year preceding the death of the donor, has to be added 1315 back to the estate, in computing the rate of Estate Duty payable and this provision would operate to increase the charge to Estate Duty, where gifts have been made to the Exchequer by the deceased within the year preceding his death. As the Committee is aware, the Exchequer has received many contributions towards the cost of the war from people of all sections of the population and I think it will be readily agreed that benefactions of this kind in the present national emergency, should be left out of account in determining the Estate Duty payable on the death of the benefactor.