§ Subsection (1) of section thirty-three of the Income Tax Act, 1945, shall be amended by the omission of the words "and each of the succeeding nine years of assessment equal to one-tenth of that expenditure," and by inserting the words "equal to one-fifth of that expenditure and to each of the succeeding eight years of assessment equal to one-tenth of that expenditure."—[Mr. Vane.]
§ Brought up, and read the First time.
Mr. Vane (Westmorland)
I beg to move, "That the Clause be read a Second time."
§ This Clause is more technical than spectacular, but the section of the Income Tax Act of 1945 to which it refers is important since it covers taxation reliefs relating to the agricultural expansion programme in respect of expenditure 1679 on fixed equipment. The new Clause has two merits which should commend it to the Chancellor of the Exchequer. It is not costly, and it makes no claim for new reliefs. All it does is to shorten the period over which the existing reliefs may be claimed, and puts an added relief on the first year.
§ It is based on the same considerations as those on which the Chancellor of the Exchequer based his revenue last year on allowances for expenditure on agricultural machinery. The task in front of British agriculture today is mainly how to increase production from poorer land. First and foremost, we must increase expenditure on fixed equipment such as roads, drainage, and houses, without which other expenditure will be reduced in value. The present rates do not offer sufficient encouragement to ensure that all these improvements are undertaken in the proper and best order. I submit that the proposals in this new Clause do improve the position, and are in fact, aimed to put this right.
§ The Solicitor-General
I would advise the Committee not to vote for this new Clause. It proposes that the initial allowance for farm buildings and similar buildings on agricultural land should be doubled. The increase in the initial allowance for industrial plant and machinery, which was introduced last year, is, after all, enjoyed just as much by farmers in respect of machinery they wish to acquire as by industrialists of any sort, so they have already received a substantial measure of relief.
The rates of allowances applicable to farm buildings are, under the Income Tax Act of 1945, 10 annual allowances of 10 per cent. That is to say, the life of the building is written off over 10 years. That is a very generous rate of allowance. It is much more generous than the allowance on industrial buildings which is 10 per cent. as an initial allowance, and 45 annual allowances of 2 per cent. The life of agricultural buildings is generally speaking much more than 10 years.
§ 1.45 a.m.
§ The question is whether in those circumstances there can be said to be a case for further increasing the advantageous allowances which they at present 1680 have. I hope the Committee, when they have taken into account the situation of the farmer vis-à-vis other producers, will agree that the farmers cannot be said to have a sufficiently strong priority for an increase in the advantage which they at present get from the allowances applicable to farm buildings under the Income Tax allowances of 1945.
§ Mr. York (Harrogate)
As usual at this time of the night we are disappointed with the brain work of the Solicitor-General. He does not appreciate the point. The real purpose of this Clause is not to increase the allowances; there is no increased allowance in this new Clause. What we are doing is merely shifting the present allowance so as to bring the emphasis on to a particular place for a particular purpose. The purpose is, if possible, to increase the provision of capital equipment in the early stages of the expansion campaign.
As my hon. Friend the Member for Westmorland (Mr. Vane) pointed out, we put forward this purely as a technical improvement so that we could help the Government to carry out their own policy. One would think in circumstances like that that one might receive from one of the Ministers of the Crown some more understanding answer than we have received from the Solicitor-General. Where the new Clause would help most would be in those areas where it is most difficult and certainly uneconomical to provide additional or new capital equipment, as on upland farms and so on. I am very disappointed that, for the second new Clause running, the Solicitor-General has entirely failed to appreciate the point that is being put to him.
§ Question put, and negatived.