§ Section eleven of the Finance (No. 2) Act, 1939 (which grants relief in respect of diminution of earned income owing to circumstances directly or indirectly connected with the war) shall apply in relation to tax for the year 1947–48 as it applied in relation to tax for the year 1939–40 with the adaptation that references to the year 1939–40 shall be construed as references to the year 1947–48 and references to the year 1938–39 shall be construed as references to the year 1946–47.—[Lieut.-Commander Braithwaite.]
§ Brought up, and read the First time.
§ Lieut.-Commander Braithwaite
I beg to move, "That the Clause be read a Second time."
This new Clause rests on a brief history. In the financial year 1939–40 relief was granted to an individual who was taxed on his earned income for the preceding year if his actual income for that year was not more than four-fifths of his earned income in the preceding financial year. This was a reduction of his assessment down to the actual income of 1939–40, and it was, of course, a condition of relief that the fall in his income was due to circumstances which could be shown to be directly or indirectly due to or connected with the war. The concession made at that time has been extended up to 1946–47, although the end of that financial year brought us to a time two years from the end of hostilities. It is not extended by the present Finance Bill to the current year 1947–48, with which we are now dealing.
This new Clause seeks to make that extension and the reason which we adduce is quite simple. It is true that the war and the crisis connected with it are ended, but there fell upon us this spring a trade crisis of the greatest severity owing to the fuel cuts and the severe weather which we experienced in the early months of the year: The Opposition is anxious to make this a non-controversial atmosphere, to retain our equipoise: so we are not blaming the Government for the weather in this connection, nor the weather for the Government. All we seek to emphasise is that the circumstances in the early months of 1947 have caused a most grievous loss of income in many trades and businesses, and we think that the principle which underlay the emergency wartime regulations should equally apply 1748 to the financial year 1948. The relief does not apply to corporate bodies and employees, but mainly to sole traders, partners and farmers. The right hon. Gentleman will see at once the importance of farmers being brought within the purview of this Clause. We discussed this under another Measure and we shall be discussing it on Friday, but it is important that farmers should be brought in. We therefore suggest that it be continued to the end of the present financial year.
§ Mr. Glenvil Hall
The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) was quite correct in his reference to the origin of this concession. It gave relief in the Finance (No. 2) Act of 1939 to individuals who, because of circumstances arising out of the war, found their income had diminished. The classic case was the man who had been in a good job or good way of business and found himself in the Army on a private's pay and had to pay Income Tax in that year on the assessment for his income in 1938–39. Obviously things could not remain like that and the enactment to which the hon. and gallant Gentleman referred was instituted, very properly so. Year after year that concession has been carried forward until last year it was thought by my right hon Friend, and I think very properly, that two years after the war this concession must now come to an end. The hon. and gallant Gentleman based his desire to continue it not because the circumstances connected with the war were still continuing, but on the very hard weather we had earlier this year and the flooding which resulted from it.
§ Mr. Glenvil Hall
And the fuel crisis. When the hon. and gallant Gentleman began to deploy that argument I looked again at the new Clause he was moving, and I found that references to continuing the Act are not to make it applicable to circumstances arising out of floods and blizzards and the fuel crisis, but to anchor it, as on former occasions, to circumstances arising out of the war. The Inland Revenue must obey the law, and if this enactment were sent forward to another year, they would have to assign this one-fifth concession, not to what happened earlier this year, but to circumstances aris- 1749 ing out of the war. It would have been very difficult to do that. The help that the hon. and gallant Gentleman desires to give to those who are assessed under Schedule D would therefore I am afraid, not assist a good many people whom it is his desire to assist.
I would remind the Committee that, now that P.A.Y.E. has been introduced, the only people who could in any circumstances be helped are the people who are assessed under Schedule D. That, in turn, arises out of circumstances affected by the war, and even with Schedule D Income taxpayers, I imagine there can be very few who have suffered a fall in income, and who would not approach the Inland Revenue with a plea for this concession, supposing my right hon. Friend agreed to it. Quite obviously, this concession has to come to an end some time. It is unsuitable to carry a wartime and rather illogical provision of this sort too far forward into peace. We have carried it forward two years, and we think that that is long enough. If an individual has the right to go to the Revenue and demand the better of two years' assessments, surely the Revenue, on its side, would be equally entitled to go to an individual and say, "If you desire to take what you think is the best assessment this year, another time, surely, we have the right to choose between two years, too." The whole thing would become, in my view, rather a muddle. Therefore, I hope the Committee will reject this new Clause. We are sympathetic, of course; and the action of the Government shows that we sympathise with those who suffered earlier