§ Mr. Piratin (Mile End)
I beg to move, in page 13, line 27, to leave out from "benefit," to the end of line 31.
With your permission, Major Milner, I should like to take in conjunction with this Amendment, the Amendment to leave out paragraph (a). Clause 20 aims to amend Section 27 of the 1946 Act so far as collecting Income Tax is concerned from those who are in receipt of certain benefits—unemployment, sickness, and maternity. This change has been introduced as from 11th May, and I seek, and I hope to have the support of many hon. Members, to repeal that change. Until that change was made, people who paid contributions—which amount to 4s. 7d. a week for a male employee—were exempt from Income Tax. In turn, when they were in receipt of benefit, 605 it was subject to Income Tax, providing that their total income qualified for tax. Many people in receipt of unemployment benefit, would not, of course, so qualify. The position now, however, is the other way. The effect of this Clause was to turn the thing upside down, and instead of the recipients of the benefit paying Income Tax in respect of that benefit, now each contributor, each week for as long as he contributes, is no longer exempt in respect of the contributions for these particular benefits. They amount to 1s. 7d. out of the 4s. 7d., and it has been estimated that on an average it may result in an increase of Income Tax to those who pay that tax of some sixpence a week.
This is a most unjust Clause. It is very unfair. The Chancellor expects a £10,000,000 addition as a result of this change in the method of taxation, and the way he expects to do it is by imposing on all contributors—which means every working man, and all other people who contribute to National Insurance—that tax shall be paid on the contributions they make for these three benefits. He could not do that but for P.A.Y.E. He cannot do it in regard to people who pay insurance through an ordinary insurance company and subsequently receive benefits—when, for example, they are sick. In those cases they will pay Income Tax only when they receive the benefit. Meanwhile, with each payment they are entitled to exemption from tax. Workers in industry who pay their weekly National Insurance contributions had, until now, the same rights as people paying a regular amount to an insurance company. We have all accepted that as being reasonable and fair, but, just because, as the Chancellor himself says in his Budget speechThe taxation of these occasional benefits is a great trouble, both to the Inland Revenue and to the recipients,he proposes to put a burden on every contributor whether he subsequently receives benefit or not.
Let us take it in some detail. The three benefits concerned are unemployment, sickness and maternity. There are some fortunate people, I imagine, even in a capitalist society, who are never unemployed until they retire. They pay their weekly contributions for unemployment 606 benefit and will not be exempt from Income Tax on their contributions although they will never receive benefit, because when they retire they will receive retirement pensions. Yet they are expected to forgo exemption from Income Tax.
There are some fortunate people—not Members of Parliament—who go through their working life in the best of health and are never sick or involved in an accident. They make their weekly contributions, but will never claim sickness benefit, but they are not to be exempt from Income Tax on their contributions. The third case is farcical, because there is no dubiety about it. There are men and women who never get married or who, if they do marry, decide not to have children. Maternity benefit will not be received, but nevertheless the contributions are made. It is clearly an injustice on the contributors that they should pay this tax every week throughout the year, throughout their lives, whether they receive benefit or not.
It seems to me that the Committee should ask the Chancellor to take back this Clause. I would say that it is even a bit cold-blooded. The way in which the Chancellor himself referred to it in the concluding remarks in that part of his Budget Speech was quite callous. He said:I hope, in fact, as a result of this change, the Exchequer will be £10 million better off than otherwise it would, since it will be able to collect tax on contributions, whereas it is almost impossible to do so on benefits."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2099.]It is really unjust to say that because it is too difficult to collect a tax from those who come within the Income Tax level and who receive benefits, the Chancellor of the Exchequer is entitled to pass the burden on to all the contributors to National Insurance. This must be as plain as a pikestaff to every Member of the Committee. I hope that it will have widespread support and that this will have its effect on the Chancellor and that he will accept it.
§ Mr. Houghton
I feel a good deal of sympathy with the Amendment moved by the hon. Member for Mile End (Mr. Piratin), although I need scarcely say that I have no political sympathy with the source from which the Amendment 607 comes. But since the hon. Member is without the support of the other half of the Communist Party at this moment, I will presume to take its place. In the speech which I made on the Budget Statement, I referred to the administrative difficulty and dilemma in which the Chancellor of the Exchequer found himself on account of the mistake, as I see it, of his predecessor in the 1946 Finance Act, when it was decided that all these benefits should be subject to Income Tax, and that a corresponding set-off against tax liability should be made in respect of the corresponding portion of the contributions.
I presumed to warn the then Chancellor of the Exchequer, from my knowledge of the administrative problems involved, that he would stand little, if any, chance of collecting the tax on unemployment, sickness, and maternity benefits, for the simple reason that while tax could be taken from the pay packet under "Pay as you Earn," it cannot be taken by the Ministry of National Insurance out of National Insurance benefits—not without a great deal of elaborate machinery to advise the Ministry of National Insurance of the rate of tax at which it should collect the deduction.
In the case of these benefits it would be necessary to await the end of the financial year before the Inland Revenue would be able to decide whether the benefits should be taxed, and if so, at what rate. It follows from that, that in almost every case where a taxpayer drew unemployment, or sickness benefit, or his wife or the taxpayer herself drew maternity benefit, the tax on those benefits would be subject to a time lag which would extend into the following financial year, and which would bring all the difficulties of explaining to the taxpayer why his or her tax code number has been altered, or why a demand for tax has been made. It would be necessary to tell the taxpayer that, 12 months ago, he or she had a fortnight's sickness and received benefit, or received benefit for some other reason.
The Chancellor of the Exchequer has had to meet the obvious difficulty of not being able to collect the tax on these benefits and, as I complained at the time, he has not only made a virtue of a necessity 608 but has set out to make a substantial profit out of it as well. What he has done, as the hon. Member who moved the Amendment has pointed out, is to exempt from tax the benefits on which he failed to collect the tax, and he proposes to make a corresponding adjustment in the tax set-off on National Insurance contributions. What it means is, that tax on £3 is to be disallowed in the Income Tax set-off for National Insurance contributions. According to whether a taxpayer is liable to Income Tax at the rate of 3s., 6s. or 9s. in the £. the additional tax imposed upon the taxpayer amounts to 2d., 4d. or 6d. a week.
To give effect to these changes it has been necessary to issue revised tax tables to all employers—two million copies of amended tax tables, 26 pages, 52 amended tables. In the instructions given on the face of the document it is said that the sheets should be cut down the middle and pasted over the corresponding tables for the weekly payments—and the Stationery Office does not even provide the gum. Two million copies have been issued to give effect to this rather small change in the liability of a very large number of people, and I ask the Financial Secretary whether he is going to say that, however costly it is to issue two million copies of the table, it will cost more to withdraw them and issue new ones. I expect that is what will be said, but that is one of the difficulties into which we have got over this comparatively small matter.
As the hon. Member for Mile End has pointed out, the Chancellor has shifted the burden of tax from the beneficiaries to all who pay contributions, irrespective of whether they get benefits or not. The Chancellor cannot say he had any loss of revenue to make good; he never had it, because he could not collect it; and the Chancellor said at the end of his Budget Statement that he hoped to make £10 million out of the change, which is equivalent to an increase of six-eighths of a penny in the taxation. It is regrettable that the Chancellor should have made this arrangement for meeting an administrative difficulty; that he should have imposed an additional tax, however small, on the whole of the persons who pay National Insurance contributions.
§ Mr. R. A. Butler
I cannot let this matter pass without saying that it is a particularly cynical proposal by the Chancellor. The truth is that, for administrative convenience, the Chancellor has landed the employed persons with an additional burden of £10 millions a year, resulting in a considerably increased number of pence a week. Anybody paying at the full rate will lose as much as ninepence a week, and I do not think that the Committee ought to let this go by without drawing the attention of the public to the charges falling on them. Employed persons have found their tax deductions increased by several pence a week.
I should like to ask the Financial Secretary for some description of the manner in which this extra £10 millions burden is made up; can he give further information than that vouchsafed by the Chancellor in his two short references to this matter—made with a large space in between, so that the tax burden came to us as a big surprise? It is not usual when suggesting that one is making a concession, to land the taxpayer with an extra burden of £10 millions, and I hope that the Financial Secretary will say that the Chancellor is using this Clause to raise a substantial measure of extra taxation from the working population of this Country.
It affects unemployment, sickness, and maternity benefits, and it turns the existing system upside down. It therefore raises a major issue for any of us who have interested ourselves in the past in the social services and is not a matter which ought to be allowed to pass by this Committee without further explanation from the right hon. Gentleman. I am quite convinced that either on this occasion or on the occasion of the Clause being put, we shall have more to say on this subject, and whether we shall do so at great length or not, I am certain that unless we get a satisfactory explanation from the right hon. Gentleman we shall have to ask the Committee to divide on the Clause in order to indicate our disquiet at a manoeuvre undertaken by the Chancellor of the Exchequer at the expense of the working population.
§ Mr. Glenvil Hall
I think that the speech we have just listened to is particularly 610 unfortunate because the situation in which we find ourselves in this matter and which my right hon. and learned Friend seeks to remedy in the Clause to which this Amendment has been moved, is entirely in accord with the views held by the party opposite and that put forward by the Chancellor of the Exchequer who represented that party in 1944. The right hon. Member for the Scottish Universities (Sir J. Anderson) indicated when he was Chancellor of the Exchequer that, as people would be getting certain benefits from the National Insurance services, it would be only fair, as they were income, that they should be taxed, and equally fair that, if that income was taxed, any contribution made in respect of it on the other side of the balance sheet should receive tax allowance. That view was written into the 1946 legislation, and so far as I know met with no opposition and no query from anybody on the other side of the Committee. It is only because administratively we have found the thing impracticable that the Chancellor made the suggestions which are now before this Committee.
§ Mr. Glenvil Hall
The right hon. Gentleman took the view that we are now placing a burden on the working classes which, as I understand him, the party opposite would not have imposed. This administratively impossible situation has arisen, not because of anything which this party did, but because the party on the other side of the Committee initiated this policy. We agreed to it and it was then thought by all parties that it would work. I put it to the Committee that it is unfair if people are to be taxed on maternity benefit—not the maternity grant—the unemployment benefit, and the sickness benefit, that they should not at the same time be given an Income Tax allowance by way of deduction for the contributions they have paid. In effect, the Amendment seeks to give them the best of both worlds. It is unfair to the general body of taxpayers.
611 It is unfortunate that the original scheme was found administratively unworkable, but it is only right that at the earliest opportunity the Government, whatever its complexion, should put this matter to the House and let it decide whether it wants to alter it. We suggest to the Committee it should. As my hon. Friend the Member for Sowerby (Mr. Houghton) has pointed out, the actual burden amounts to £10 million, but that, taken as a percentage on what is raised in the shape of Income Tax, is very small indeed. Of the actual working population 2 to 3 and even more millions do not ordinarily pay tax at all. Even where it does take effect, it is 2d. a week for those who pay income tax at 3s. in the pound, 4d. for those who pay at 6s. in the pound, and for those who pay the standard rate of 9s. in the pound it means no more than 6d. a week.
Although it is true that in the aggregate it amounts to £10 million compared with the hundreds of millions we raise from those other sources it is not the burden on the working man suggested on both sides of the Committee. It is nothing of the sort. It represents the tax on 1s. 7d. which is now if the Committee accepts this Clause, to be disallowed out of the contribution of the ordinary man of 4s. 7d. There are many many hundreds of thousands of people even now who will not be touched. It would be unfair to leave the situation as it is, and for those reasons I hope the Committee will reject the Amendment.
§ Mr. Piratin
I want to take up one of two points of the Financial Secretary. He began his case by saying that he was merely carrying out the policy introduced by the right hon. Member for the Scottish Universities (Sir J. Anderson). The Financial Secretary said that the right hon. Member for the Scottish Universities had foretold that this problem was likely to come about, and therefore it might be necessary to take the step the Chancellor of the Exchequer now proposes. While it may be that is a good debating argument for the Opposition, who must stand by their friends and the right hon. Gentleman, it is really no argument for this side of the Committee. When the Financial Secretary came to argue the case from his side he had nothing to say. He still avoids the whole question and 612 distorted, no doubt accidentally, what I said.
I in no way suggested that these people should have the best of both worlds. I said that the Inland Revenue were entitled to collect Income Tax from the recipients of those benefits if they qualified at Income Tax levels. I further said that the Inland Revenue were not entitled to a contribution weekly from people who may never be in receipt of those benefits. [An HON. MEMBER: "How are you going to collect it?"] We had a good hint from the hon. Gentleman the Member for Sowerby (Mr. Houghton) who referred to the possibility of taking it forward to the next year. The right hon. Gentleman and his colleagues on the Treasury Bench have plenty of very able officials at the Treasury to work the thing out. If they cannot work it out, well and good, but it is still unfair to place the burden on another section of the community who have nothing to do with the people avoiding Income Tax payments.
The Financial Secretary then said that the total amount involved—£10,000,000—is a very minute proportion of the total of Income Tax. It is roughly 1 per cent., but the fact is that this burden is not falling on Income Tax payers as a whole but on that section who pay National Insurance contributions on a P.A.Y.E. basis. That means that, as the Fnancial Secretary has himself acknowledged and as was referred to by the right hon. Member for Saffron Walden (Mr. R. A. Butler), it will fall on working people. It is they who pay National Insurance contributions, and if the Chancellor of the Exchequer wants to cast his net wide over all Income Tax payers, let him come forward at the time of the Budget or the Finance Bill and bring in a proposal for that purpose. Then the House and the Committee could consider it. He has not done it in this case. It is a most unjust tax, and cannot be justified in any way by a Labour Ministry.
§ Mr. Oliver Poole (Oswestry)
This is the second time in our debates that the line has been taken by hon. Gentlemen opposite that any amount received by way of Income Tax only affects a small proportion of the people of this country. Though I do not often find myself in agreement with him, there is a great deal 613 in the argument that the hon. Member for Mile End (Mr. Piratin) has just been putting forward. On the basis that the Financial Secretary has been advancing, £10 million is being contributed by a large number of people. Some people would pay 2d. and some 6d.: my figures do not agree, for I think some might pay 9d.; but it may be reckoned that something between 4d. and 6d. will be paid.
It means that on the average £1 a year will be paid, and that this £10 million will be contributed by 10 million people. It takes away the basis of the argument that to take 6d. off the Income Tax would benefit only a small number of the community, because here are 10 million taxpayers. The Chancellor has put a considerable burden on that section of the community which can least afford to pay. I hope these two arguments will show clearly that any incidence of Income Tax does not affect a small section of the community but affects a large section and that, therefore, we shall hear no more of this argument.
§ Amendment negatived.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Lieut.-Commander Braithwaite
I re-entered the Chamber while the hon. Member for Sowerby (Mr. Houghton) was speaking, and I did not hear all that he said. If perchance I am repetitive, I apologise to the Committee. I gathered that the hon. Member was pointing out some of the accounting difficulties which arose from the proposals set forth in this Clause, particularly the large amount of unnecessary work that must be thrown, not only on accountants, but on office staffs in businesses, in apportioning the very trivial amounts which have to be set off in the books of small traders, professional men and so on. National Insurance charges will have to be more carefully segregated into their various compartments as between employees' insurance, employers' contribution which are allocated to sickness, unemployment and so forth; and, of course, there is maternity benefit.
These proposals seem to me to be particularly unfortunate. I do not want to repeat the argument already put before the Committee, because the Financial 614 Secretary has emphasised it. Here there is a complete reversal of policy in every sense of the word. It is a retrograde step when one is trying to consider simplification of taxation and returns. It is, of course, also an ingenuous proposal and a cynical one. The disallowance of the proportion of the contributions relating to unemployment, sickness and maternity benefits will undoubtedly fall very largely on a class which will receive no benefit from this source.
The Debate which we have had on this Clause has been of value in underlining certain aspects of Government policy. It seems that not only will a lot of the old forms have to be destroyed, but a large number of Socialist leaflets will have to be destroyed. How much longer will it be possible for hon. Members opposite to tour the country claiming that all these social services are provided free to the people of this country? We have heard, at every by-election which has been fought that this Government are providing all these blessings free. The Financial Secretary has blown that argument sky high, and I am sorry that the hon. Member for East Coventry (Mr. Crossman) was not present, because what he said this afternoon was that the return of a Tory Government would mean a slashing cut in social services.
Now we have the Socialists' inverted method. They are going to tax the social services to the tune of £10 million, and I do not think it makes any difference to the unfortunate working man by what method it is done. The £10 million is to be taken from his pocket. We think it necessary to divide against this Clause as a protest against the extremely cynical and unbusinesslike conduct of the Government. I shall be interested to see how many Members opposite support this proposal. It will be interesting to see whether the hon. Member for Luton (Mr. Warbey) supports the imposition of a £10 million tax upon unemployment, sickness and maternity benefits. In view of all that hon. Members opposite have said and written in recent weeks and months at by-elections, there is only one course they can pursue. That is to accompany us into the Lobby and join in the protest we are making.
§ Mr. Warbey
I would not have intervened but for the utter poppycock we 615 have heard from the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite). He seems to be completely confused about the distinction between that part of the social service benefits which are a return for insurance payments, and those which come out of national taxation. A large part of the social services is provided from Exchequer contributions which come out of general taxation. I am sorry to give the hon. and gallant Member this very simple lesson in finance, but he has really asked for it.
The benefits which are received under the National Insurance Act are very largely paid for by the contributions made by the insured contributors and are a form of insurance which they pay out of their income. They are perfectly well aware of that. Socialists are not going about the country telling them that the benefits they receive are received entirely free. [HON. MEMBERS: "Oh."] They are as well aware of that as we are—hon. Members opposite do not seem to have discovered this yet—they have acquired a much greater degree of political alertness in the last few years than they had in the past when they could be deceived by the propaganda of hon. Members opposite. They know perfectly well when they are paying insurance contributions and receiving benefits and when they are contributing to the general taxation and receiving social services paid for out of that taxation.
The whole question here is a simple one of whether or not one should tax that part of a person's income which goes in the form of insurance payments. That is a simple issue. I see no reason on general theoretical grounds why, if persons spend part of their income on insurance payments, that part of their income should not be subject to taxation. I think it was a little unfortunate, if I may say so, that the Chancellor of the Exchequer, in introducing this change in his Budget speech, found it necessary to express such gleeful anticipation of the benefits the Treasury would receive out of the change. It was one of those psychological blunders which the Chancellor made in some parts of his speech; but it still does not alter the essential principle which we have to decide this 616 evening, and which is quite a simple one—whether or not tax should be paid on that part of income which goes into insurance.
§ Sir W. Darling
I want to say very briefly that it is no new thing to those who have worked for the building-up of a National Insurance system to hear of administrative problems and difficulties in connection with the National Insurance Act. I was one of the two hon. Members of the House who desired to vote against the Act but could not do so on account of the Rules of the House. I am bound to recall the warnings I voiced about the unavoidable confusion and muddle which this ill-conceived and hastily-designed plan brought about, and it does not surprise me to learn that the Government find it necessary to make this painful alteration.
What I should like to know is how it is that the ordinary person who pays an insurance premium to an ordinary life insurance company gets a rebate on such insurance premiums up to one-sixth of income and I think 8 per cent. of the sum assured, while the working classes paying these insurance premiums are not entitled to a similar rebate? I think that surely calls for some kind of explanation. when the argument is put forward that this does not constitute an imposition of £10 million on the lowest-paid wage earners.
I am impressed by the argument of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) that the Government have never properly acknowledged what they owe to the thousands of unpaid people engaged in elaborate calculations every week and month in the form of P.A.Y.E. This is a further imposition, this pasting of sheets of paper on these ridiculous books. The Government have no idea of the intricate worry and annoyance that these unpaid tax collectors have got to undergo. The Inland Revenue should be thankful for its highly paid and long-established administrative service, yet it really depends on thousands of unpaid tax collectors.
§ Mr. W. R. Williams (Heston and Isleworth)
Would the hon. Member say which Government introduced P.A.Y.E.?
§ Sir W. Darling
I am concerned with this Clause which is put forward by the 617 Government on very indifferent and specious grounds. I am glad of the hon. Member's intervention because I can give him information. It is this Government I am engaged in criticising and which he is supporting. They are operating a system of P.A.Y.E. which is administratively inconvenient. They are defrauding the working class of this country of £10 million. An hour ago I made a plea for the Surtax payers, because I thought that they were a small minority being treated unjustly. Now we have £10 million being pillaged and taken from people who are encouraged to believe that National Insurance is the be-all and end-all. I hope that the Government will withdraw this proposal, because I shall speak against it again and again. This scheme, conceived in misrepresentation and propaganda, is proving to be what in fact it is, a scheme for taking money out of the pockets of the people without giving them any commensurate advantage.
§ Mr. Turton (Thirsk and Malton)
We spent a good many hours last night and this morning listening to proposals to obtain £6 million from those who gamble on the football pools. I hope hon. Members opposite will not begrudge time spent in attempting to defeat a proposal to take £10 million from the pockets of the working class people of this country.
§ Mr. Turton
Because it is the employed contributor who is paying and not the employer. The people I wish to talk about particularly are the agricultural workers of this country. Under the suggested new Clause, a great many are being brought into the Income Tax limit who were not paying Income Tax before. It is extremely unfair that when costs are going up, as they are at the present time, and this Finance Bill adds to the costs of the lower-paid worker, they should have to pay Income Tax for no very good reason.
The argument of the right hon. Gentleman is that it is administratively convenient. Let us look at it from the point of view of the agricultural worker. Under the old National Insurance scheme he paid a very low contribution to insure against unemployment. That has been put very much higher under the present 618 National Insurance system. Why should he pay Income Tax on his contribution against unemployment? The justification given by the right hon. Gentleman is that if he became unemployed, we would not be able to collect the tax on the unemployment benefit. I should hope that no self-respecting Government would think of collecting tax from an unemployed agricultural worker.
§ Mr. Turton
This is a new means test put up by the Financial Secretary, and I should be very surprised to see the hon. Member for Jarrow (Mr. Fernyhough) going into the Lobby in support of this new means test. Surely it is a most deceptive argument to put before the Committee, that merely because, in misfortune, the right hon. Gentleman and his tax officials are not qualified to collect tax, he should collect an extra £10 million from the working population of this country.
§ Mr. Eccles
I support what has been said by my hon. Friend the Member for Thirsk and Malton (Mr. Turton). As a result of this Clause, one of my men has to pay 1d. a week and another 2d. a week. Neither of them was in the Income Tax range before. It is a great bother to them and it is a great bother to me having to collect the 3d. each week and hand it to the tax collector. But that is not the point with which I wish to deal. I shall vote against this Clause for a rather different reason.
It no doubt would be right, sooner or later, to tidy up this matter of Income Tax on contributions and benefits, but is it right to do it at this moment? Here is the Chancellor, as the hon. Member for Luton (Mr. Warbey) properly said, gleefully telling us that he is going to get £10 million more. I agree that that was the way the right hon. and learned Gentleman spoke. It only proves how short of revenue he is. We are trying to keep incomes steady. There is a campaign which we all support to prevent further rises in industrial costs. The Government ought to take the greatest care at this time to do nothing which will in any way encourage demands for further 619 rises in income. What is £10 million against the total of Government expenditure? All hon. Gentlemen opposite know that if their Government knew how to housekeep, and how to manage its own affairs, it could easily save £10 million. This is the sort of tax the Committee ought to vote against, because at this critical time we should be economising and not putting on new taxes.
§ Viscount Hinchingbrooke
We have heard it said that this proposal of the Chancellor's is cynical because it suddenly mulcts working people of £10 million. We have heard it described as cynical because it puts new burdens on clerks and accountants of private firms. I maintain that it is cynical on a third ground—the disposition of the Chancellor to act without reference to the House of Commons. This is not the kind of proposal which needs to be introduced immediately after the Budget, like a duty on beer or tobacco. It is a proposal attached to National Insurance, and could have been introduced at some date later in the Summer, after the House had had an opportunity to debate the merits of the scheme. But the Chancellor and the Treasury, in the characteristic way they act, have said "House of Commons opinion on this is not to be considered; it is to be put into force." The forms are printed automatically, and only when the whole thing has gone through de facto are we consulted de jure. I call that particularly cynical of the right hon. and learned Gentleman, and characteristic of the general arrogance with which he and the Treasury act.
§ Mr. Hollis
I think it is cynical on a fourth ground. The Financial Secretary thought that we were criticising simply because the sum was £10 million. We are not justified in sneering at £10 million, but that was not the point in our minds. My point is similar to that of the hon. Member for Luton (Mr. Warbey)—whether it is right to tax that portion of income which goes in insurance payments. But what the hon. Member should have said was, that portion of income which goes in compulsory insurance payments. Money taken away from people without any choice on their part is not income, and therefore tax is being charged on what is not part of their income at all. When they receive 620 benefit, that is part of their income, and there is nothing ethically wrong in charging tax on that; but if we tax compulsory insurance payments, we are taxing as income something which is not income.
§ Mr. Glenvil Hall
I should like to appeal to the Committee to get this matter in perspective. Right hon. and hon. Gentlemen opposite have said over and over again that they are against this change because it would be a burden on the working man. The reverse is very largely the case. Every year 50 million payments are being made to something like seven million people. The amount involved runs into millions of pounds. I think it is reasonable to say that the benefit of that money is going into working-class homes which, thanks to this Government, do not pay any Income Tax at all. Therefore, when the hon. and gallant Member for Holderness (Commander Braithwaite) said that this change will nullify some imaginary statements which Socialist speakers are supposed to make to the effect that these benefits are free, it should be noted that, by this change, the benefits will for a very large number of people now be free because the people will be getting the benefits now without having to pay Income Tax as the present law says they should pay. In view of the way in which the hearts of hon. Gentlemen opposite are bleeding for the working man, I think it fair to put this into perspective.
The hon. Member for Thirsk and Malton (Mr. Turton) said that this meant that the agricultural worker would now have to pay Income Tax where previously he did not. I should like to hear of these cases. It means Income Tax only on £3. If the addition of Income Tax on £3 of their income is going to make all that difference to an agricultural worker, I should like to meet that agricultural worker. Perhaps the hon. Gentleman will introduce me to him, or anyhow send me his address.
§ Mr. Turton
I will certainly do so if the hon. Gentleman will come to my constituency. The agricultural labourer now has to pay, through him, more for his meat and more for his butter and more for the other things he needs.
§ Mr. Glenvil Hall
The original arrangement, with which no one on the 621 opposite side quarrelled, was that if allowances were made for contributions, Income Tax should be paid on the benefits they receive. I have quoted figures to show that administratively this has now become so vast a thing that it has become impossible to collect the Income Tax that would fall on those benefits which go into all these homes, and it would help to defeat what we all desire to see accomplished.
At Question time I am often asked about the efforts of the Inland Revenue to collect arrears of tax from individuals. Here it would mean that large numbers of people would be assessed in arrear for benefits which they had received 12 months before and probably forgotten about. Otherwise, it would mean changing the codes. I hope the hon. Gentleman follows me. If we do not collect this in arrear, it means a constant change in coding and the employment of a large number of people to follow these changes. Assessment has to be made in arrear. We all dislike it, most of all the man who has received the payment, about which he has often forgotten. Therefore it seems to us that, from the commonsense point of view, what my right hon. and learned Friend suggests is the correct course for us to follow, and that it will cause no hardship to anyone. The people who will pay the £10 million will in most cases be those people—
§ Lord Hinchingbrooke
The point is that the right hon. Gentleman maintains that the people do not mind this £10 million imposition, but when we ask the Exchequer to give up the £10 million the right hon. Gentleman complains very much indeed.
§ Mr. Glenvil Hall
I am afraid I do not see the relevance of that interjection. I am dealing with a specific point and, if I may say so, I think it is a good one. I think that collectively both sides of the Committee want to find a solution to this problem, because none of us knows how this may mount up in the years to come. 622 The law, as it stands at present, says that these payments have to be tracked down and assessed and Income Tax charged upon them. That is a difficult thing to do. We ought not to leave the situation as it is. We ought to clear it up. If we were to follow it up in the way suggested, and to which the party opposite agreed, it would mean vast expenditure of time and manpower. We suggest that we should follow the course proposed by the Chancellor of the Exchequer, and do what is suggested in this Clause.
May I make one final observation before I sit down We have all been reading the Report on Population. I should like to say that this change should help to increase the population of this country, because now, although some individuals who are in the Income Tax-paying class will no longer get a deduction on their contributions amounting, as I say, at most to £3, if they draw maternity benefit, it will be free, and this will be an incentive to them.
§ Mr. R. A. Butler
The right hon. Gentleman, in answering my original speech, was angry with me for raising this point. He attempted to make out that there was something dishonest or dishonourable in my remarks. He said that we were going against some arrangement made by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson), who was then Chancellor of the Exchequer. It then turned out, by the process of reasoning which is peculiarly his own, that this proposal had been completely reversed. I fail to see why, if the proposal has been reversed. I have been dishonest in objecting to the proposal made by the present Government. We accept no responsibility for this arrangement.
I said in my original remarks that unless we received from the right hon. Gentleman an explanation which was satisfactory, we would divide against the Clause. I want to say, briefly, that we have received no explanation. We do not understand why it is necessary to levy this extra £10 millions. The right hon. Gentleman has truly acknowledged, by the fact that £10 million extra is being levied, that this is a considerable burden upon the working and other classes of this country. What is somewhat enter- 623 taining at this late hour in this Debate is to see what has happened.
The party which sits on this side of the Committee has been acknowledged by the Lord President himself, at Blackpool, as having the support of the working classes in this country. It stands for, and represents, their interests, and that infuriates hon. Members opposite; and here is a directive to the truth of what we said earlier in the Debate this afternoon—that we stand for all classes in this country and for their best interests, and that in any action we take, whether on the Finance Bill or in other matters, we are looking at the nation as a whole. We are not satisfied that with all this elaborate arrangement, which is imposing an extra £10 million, the nation is getting a fair deal. The Chancellor of the Exchequer himself said that, although theoretically this should lead to a reduction of receipts, it is going to lead to an increase of £10 million. If something theoretical is supposed to represent a re-
§ duction, and suddenly one finds that £10 million extra burden has been put on the taxpayers, I say that is downright dishonesty. We cannot stand for that sort of thing.
§ 12.15 a.m.
§ Finally, we come to the concluding argument of the right hon. Gentleman in his quite astonishing suggestion that, because there is a rearrangement between maternity benefit being taxed and £10 million being put on in another way, there will be an increase in the population. All I can say to that suggestion is that it is on a level with the other arguments which he has used throughout this Debate, and I do not think the Commission on Population would agree with him. I must, therefore, say without hesitation that we shall have to vote against this Clause.
§ Question put, "That the Clause stand part of the Bill."
§ The Committee divided: Ayes, 178, Noes, 86.625
|Division No. 175.]||AYES||[12.17 a.m.|
|Acland, Sir Richard||Fernyhough, E.||Lyne, A. W.|
|Adams, Richard (Balham)||Field, Capt. W. J.||McAllister, G.|
|Albu, A. H.||Fletcher, E. G. M. (Islington, E.)||McGhee, H. G.|
|Allen, A. C. (Bosworth)||Foot, M. M.||Mack, J. D.|
|Attewell, H. C.||Freeman, J. (Watford)||Mackay, R. W. G. (Hull, N. W.)|
|Austin, H. Lewis||Ganley, Mrs. C. S.||McLeavy, F.|
|Awbery, S. S.||Gibson, C. W.||MacPherson, Malcolm (Stirling)|
|Bacon, Miss A.||Greenwood, A. W. J. (Heywood)||Mallalieu, E. L. (Brigg)|
|Baird, J.||Griffiths, W. D. (Moss Side)||Mallalieu, J. P. W. (Huddersfield)|
|Barton C.||Guy, W. H.||Mann, Mrs. J.|
|Bechervaise, A. E.||Hale, Leslie||Mellish, R. J.|
|Berry, H.||Hall, Rt. Hon. Glenvil||Middleton, Mrs. L.|
|Beswick, F.||Hamilton, Lieut.-Col. R.||Mikardo, Ian|
|Bing, G. H. C.||Hannan, W. (Maryhill)||Mitchison, G. R.|
|Binns, J.||Hardman, D. R.||Monslow, W.|
|Braddock, T. (Mitcham)||Henderson, Joseph (Ardwick)||Morris, Lt.-Col. H. (Sheffield, C.)|
|Broughton, Dr. A. D. D.||Hobson, C. R.||Morris, P. (Swansea, W.)|
|Bruce, Maj. D. W. T.||Holman, P.||Nally, W.|
|Butler, H. W. (Hackney, S.)||Holmes, H. E. (Hemsworth)||Neal, H. (Claycross)|
|Callaghan, James||Horabin, T. L.||Oldfield, W. H.|
|Chamberlain, R. A.||Houghton, A. L. N. D. (Sowerby)||Orbach, M.|
|Chetwynd, G. R.||Hudson, J. H. (Ealing, W.)||Paget, R. T.|
|Collindridge, F.||Hughes, Hector (Aberdeen, N.)||Paling, Will T. (Dewsbury)|
|Collins, V. J.||Hynd, J. B. (Attercliffe)||Palmer, A. M. F.|
|Corbet, Mrs. F. K. (Camb'well, N. W.)||Irving, W. J. (Tottenham, N.)||Pargiter, G. A.|
|Cove, W. G.||Janner, B.||Parker, J.|
|Crawley, A.||Jay, D. P. T.||Parkin, B. T.|
|Crossman, R. H. S.||Jeger, G. (Winchester)||Paton, J. (Norwich)|
|Dalton, Rt. Hon H.||Jeger, Dr. S. W. (St. Pancras, S. E.)||Pearson, A.|
|Davies, Edward (Burslem)||Jenkins, R. H.||Peart, T. F.|
|Davies, Ernest (Enfield)||Jones, Elwyn (Plaistow)||Proctor, W. T.|
|Davies, Haydn (St. Pancras, S. W.)||Jones, P. Asterley (Hilchin)||Randall, H. E.|
|Davies, S. O. (Merthyr)||Keenan, W.||Ranger, J.|
|Deer, G.||Kenyon, C.||Rankin, J.|
|Delargy, H. J.||King, E. M.||Reid, T. (Swindon)|
|Dodds, N. N.||Kinley, J.||Rhodes, H.|
|Donovan, T.||Lang, G.||Roberts, Goronwy (Caernarvonshire)|
|Driberg, T. E. N.||Lee, F. (Hulme)||Robertson, J. J. (Berwick)|
|Dugdale, J. (W. Bromwich)||Levy, B. W.||Robinson, Kenneth (St. Pancras, N.)|
|Dumpleton, C. W.||Lewis, A. W. J. (Upton)||Ross, William (Kilmarnock)|
|Edwards, W. J. (Whitechapel)||Lewis, J. (Bolton)||Royle, C.|
|Evans, Albert (Islington, W.)||Lindgren, G. S.||Segal, Dr. S.|
|Evans, S. N. (Wednesbury)||Logan, D. G.||Sharp, Granville|
|Fairhurst, F.||Longden, F.||Shawcross, C. N. (Widnes)|
|Shawcross, Rt. Hn. Sir H. (St. Helens)||Sylvester, G. O.||White, H. (Derbyshire, N. E.)|
|Shurmer, P.||Symonds, A. L.||Whiteley, Rt. Hon. W.|
|Silverman, J. (Erdington)||Taylor, R. J. (Morpeth)||Wilcock, Group-Capt. C. A. B.|
|Silverman, S. S. (Nelson)||Thomas, D. E. (Aberdare)||Wilkes, L.|
|Simmons, C. J.||Thomas, George (Cardiff)||Wilkins, W. A.|
|Skeffington, A. M.||Thomas, I. O. (Wrekin)||Willey, F. T. (Sunderland)|
|Skinnard, F. W.||Thomas, John R. (Dover)||Willey, O. G. (Cleveland)|
|Smith, C. (Colchester)||Tolley, L.||Williams, J. L. (Kelvingrove)|
|Smith, S. H. (Hull, S. W.)||Tomlinson, Rt. Hon. G.||Williams, Ronald (Wigan)|
|Snow, J. W.||Ungoed-Thomas, L.||Williams, W. T. (Hammersmith, S.)|
|Sorensen, R. W.||Wallace, G. D. (Chislehurst)||Williams, W. R. (Heston)|
|Soskice, Rt. Hon. Sir Frank||Wallace, H. W. (Walthamstow, E.)||Wilson, Rt. Hon. J. H.|
|Steele, T.||Warbey, W. N.||Wyatt, W.|
|Stross, Dr. B.||Webb, M. (Bradford, C.)||Younger, Hon. Kenneth|
|Stubbs, A. E.||Wells, P. L. (Faversham)|
|Swingler, S.||Wheatley, Rt. Hon. John (Edin'gh, E.)||TELLERS FOR THE AYES:|
|Mr. Popplewell and Mr. Bowden.|
|Agnew, Cmdr. P. G.||Foster, J. G. (Northwich)||Peake, Rt. Hon. O.|
|Amory, D. Heathcoat||Fraser, H. C. P. (Stone)||Poole, O. B. S. (Oswestry)|
|Assheton, Rt. Hon. R.||Galbraith, Cmdr. T. D. (Pollok)||Prescott, Stanley|
|Astor, Hon. M.||Galbraith, T. G. D. (Hillhead)||Raikes, H. V.|
|Baldwin, A. E.||Gomme-Duncan, Col. A.||Roberts, Emrys (Merioneth)|
|Birch, Nigel||Gridley, Sir A.||Ropner, Col. L.|
|Boles, Lt.-Col. D. C. (Wells)||Grimston, R. V.||Ross, Sir R. D. (Londonderry)|
|Bowen, R.||Hare, Hon. J. H. (Woodbridge)||Spearman, A. C. M.|
|Boyd-Carpenter, J. A.||Harris, F. W. (Croydon, N.)||Stanley, Rt. Hon O.|
|Braithwaite, Lt.-Comdr. J. G.||Hinchingbrooke, Viscount||Stoddart-Scott, Col. M.|
|Bromley-Davenport, Lt-Col. W.||Hollis, M. C.||Strauss, Henry (English Universities)|
|Buchan-Hepburn, P. G. T.||Hope, Lord J.||Stuart, Rt. Hon J. (Moray)|
|Bullock, Capt. M.||Howard, Hon. A.||Taylor, C. S. (Eastbourne)|
|Butcher, H. W.||Hulbert, Wing-Cdr. N. J.||Teeling, William|
|Butler, Rt Hn. R. A. (S'flr'n W'ld'n)||Hutchison, Col. J. R. (Glasgow, C.)||Thomas, Ivor (Keighley)|
|Channon, H.||Keeling, E. H.||Thomas, J. P. L. (Hereford)|
|Clarke, Col. R. S.||Lancaster, Col. C. G.||Thorneycroft, G. E. P. (Monmouth)|
|Conant, Maj. R. J. E.||Legge-Bourke, Maj. E. A. H.||Turton, R. H.|
|Corbett, Lieut.-Col. U. (Ludlow)||Lloyd, Selwyn (Wirral)||Wakefield, Sir W. W.|
|Crookshank, Capt. Rt. Hon. H. F. C.||Low, A. R. W.||Walker-Smith, D.|
|Crowder, Capt, John E.||Lucas-Tooth, Sir H.||Ward, Hon. G. R.|
|Darling, Sir W. Y.||Mackeson, Brig. H. R.||Webbe, Sir H. (Abbey)|
|Davidson, Viscountess||Macmillan, Rt. Hon. Harold (Bromley)||Williams, Gerald (Tonbridge)|
|De la Bère, R.||Manningham-Buller, R. E.||Willoughby de Eresby, Lord|
|Dodds-Parker, A. D.||Marshall, S. H. (Sutton)||York, C.|
|Dower, Col. A. V. G. (Penrith)||Mellor, Sir J.||Young, Sir A. S. L. (Partick)|
|Drewe, C.||Neven-Spence, Sir B.|
|Dugdale, Maj. Sir T. (Richmond)||Nicholson, G.||TELLERS FOR THE NOES:|
|Eccles, D. M.||Nutting, Anthony||Colonel Wheatley and|
|Fletcher, W. (Bury)||Odey, G. W.||Mr. Simon Wingfield Digby.|
Question put, and agreed to.