§ 4.45 p.m.
§ The Solicitor-General (Sir Frank Soskice)
I beg to move, in page 15, line 25, to leave out from "arrangements" to "provision," in line 26, and to insert: 60made on or after the seventh day of April, nineteen hundred and forty-nine.The object of the Amendment is to take away the retrospective effect of the application of the Clause to certain policies of insurance. When we were discussing the Clause in Committee, many hon. Members opposite felt strongly that 61 it should not be retrospective. I deployed the reasons which seemed to us to be adequate for giving it retrospective effect of a very limited character. However, those reasons did not commend themselves to hon. Gentlemen opposite, and I think that my hon. Friends also felt that the Clause should not be retrospective. In those circumstances we have reconsidered the matter, and, having regard to the general view expressed, we have thought it right that the Clause should not be retrospective.
§ Mr. R. A. Butler
I thank the Solicitor-General for a concession by the Government which meets the legitimate criticism which the Opposition put forward. This Amendment makes the Clause much easier to accept. It is a sign of grace that the Government should have listened to criticism and accepted so handsomely what was put before them.
§ Mr. Benson (Chesterfield)
I am not, at all certain that the Amendment is a wise one, For many years now we have discussed these various complicated arrangements by which income is transmuted into capital for the purpose of taxation, and from time to time, Chancellors of the Exchequer have threatened that when they dealt with these matters they would make the provisions retrospective. I believe that upon one or two occasions we have done that. That general warning has been given not once but many times in this House by Chancellors of the Exchequer. Our determination to do this should not be weakened by taking notice of the protests of the Opposition, because Opposition Chancellors in the past have given that warning. On this Bill the Opposition have been clamouring for retrospective legislation when it was in the nature of concessions on the depreciation allowances. Where these schemes are deliberately designed for the purpose of tax avoidance, the penalties which have been threatened should be imposed as a warning to those who attempt to avoid taxation by these devious methods.
§ Lieut.-Commander Braithwaite
I rise merely to point out to the hon. Gentleman that during the last discussion on this matter the Solicitor-General was at some pains to make the point that hon. Gentlemen on these benches had taken exception to retrospective machinery, and that some of his hon. Friends felt the same 62 way. So I do not think there is a point here at all. The fact of the matter is that retrospective legislation, and retrospective taxation in particular, has many objectionable features which we have discussed so often in this House that I will not reiterate the arguments now.
§ Mr. Benson
I was not trying to make a party point. I drew the attention of the House to the fact that these warnings have in the past been given by Conservative Chancellors.
§ Lieut.-Commander Braithwaite
Yes, but the hon. Gentleman pointed a minatory finger in this direction when delivering some of those sentences, and it would be a pity if it went on record that objection to this kind of legislation is by any means confined to any party. The hon. Gentleman and I have both been here long enough to know that the attitude of mind to the Government on those occasions is determined by whatever side of the House one happens to be sitting on at the time. However, I have always felt that retrospective taxation of this kind is objectionable, unless there have been the clearest warnings 12 months earlier, and I hope the House on this occasion will support the Government in the concession they have made.
§ Mr. C. Williams
I agree with the right hon. and learned Gentleman that no one wishes to do anything else but make tax evasion difficult, but the hon. Member for Chesterfield (Mr. Benson) was a little hard on the Chancellor of the Exchequer today. Here is the Chancellor, with all his difficulties, for once doing something of real value for productive purposes, and when the Chancellor follows directly the Opposition's advice to do something sensible, the hon. Member for Chesterfield says he doubts the wisdom of it. I do not think it is fair of the hon. Member to treat his own Front Bench in that way, and I would warn the hon. Member, whose abilities I admire in a sense, that if he goes on like that many times, he will be in danger of being mistaken for a Member of the smaller Liberal group in this House, which kind of reactionary behaviour seems to be growing.
For that reason, I hope the hon. Member for Chesterfield will abstain from needlessly lengthening debates by 63 sheer abuse of his own Front Bench when they are really being very good. I regret what has happened, because it is one of the rare occasions when we can all say that the Treasury have done something wise, not at the instance of the Treasury or of the Government, but mainly of the Tory Party, supported by certain sensible back bench Members opposite.
§ Mr. Henry Strauss (Combined Universities)
The only back bench Member opposite who gave us some help on the last occasion was, I think, the hon. and learned Member for East Leicester (Mr. Donovan). I cannot help thinking that the hon. Member for Chesterfield (Mr. Benson), who I know gives these matters great thought, might have refreshed his memory of what happened in that Debate. If he does so, he will satisfy himself that this is not one of those cases where, on the basis of any declaration previously made by a Minister, retrospective action would be suitable.
The fact is that this Clause results from a victory in the courts of the hon. and learned Member for East Leicester, and the House of Lords itself decided that certain payments were not income for Income Tax purposes. While it may or may not be proper to reverse that decision, it cannot be in the interests of British insurance, or, indeed, of the credit of our insurance companies who are seeking to win invisible exports, that the meaning of a policy should be altered retrospectively, when people have entered into these contracts in the light of a decision of the highest tribunal in this country. For those reasons, I hope that the hon. Member for Chesterfield will not disagree with Ministers who have come to a wise decision in making this Clause not retrospective.
§ Amendment agreed to.
§ Mr. Deputy-Speaker
I think it will be convenient to discuss the next two Amendments together, namely, to leave out Clause 24 and to leave out Clause 25.