For Part III of the First Schedule to the Income Tax Act, 1952 (relating to the qualifications of general commissioners) the following shall be substituted: —
To be qualified to be appointed a general or additional commissioner, a person must, in the year of charge next preceding the year of charge in which he is appointed, have a total income of not less than two hundred pounds."—[Mr. Mitchison.]
§ Brought up, and read the First time.
§ Mr. Mitchison
I beg to move," That the Clause be read a Second time.
It was 16 years ago, roughly, that this particular matter was described by the Codification Committee as among the most archaic and anomalous of all the provisions of the Income Tax Act, which, at that time, was the Income Tax Act, 1918. It is, of course, re-enacted and codified in the 1952 Bill, and it appears there in the First Schedule.
The present position is that no person shall be capable of acting as a general commissioner unless he possesses certain property qualifications, which I shall mention in a minute, or, even more oddly, unless he be the eldest son of a person possessing three times the qualifications, or, if it is in Scotland in a Scottish county, twice the qualifications.
That is a bit odd to begin with, but matters become even queerer when we turn to see what the qualifications are. They are exclusively a matter of property, and they may be qualifications on the value of real estate—that is to say, land held—or of personal estate—that still excludes earnings, of course, but it covers other property; or, lastly, the combined qualification of those two matters. They are divided according to where the general commissioners are operating, and if they are operating in county divisions in England, and in various cities to which I shall refer in a minute, they have to have the highest qualification of the lot, and they have to own by way 1056 of real estate £200 worth a year or to have personal estate amounting to £5,000 or producing an annual income of £200.
Then there is also the combined qualification. The archaic character of this remarkable position is illustrated by the choice of the towns. London is included, Birmingham, Bristol, and so on—Great Yarmouth, King's Lynn, Hull and Leeds. I do not want to trespass in any way on the territory of my hon. Friend the Member for Sowerby (Mr. Houghton), or, indeed, to touch rashly on the affairs of Yorkshire at all, but it is very odd that the qualification, if one happens to be a general commissioner for Leeds, is different from what it is if one is a general commissioner for Bradford, and it is odder still if one happens to be a general commissioner for the comparatively small place of King's Lynn—one is up on to the highest scale; while numbers of large cities escape entirely from that particular provision.
Next we have all other cities—city divisions—of England, and they have £150 real estate qualification. But this is not only an English anomaly. There is an even more remarkable position when we get to the qualifications in Scotland. In Scotland we have a very broad line of division—county divisions in Scotland and the qualifications, be they in Clackmannan, Midlothian or the remoter parts of Caithness are, by way of real estate, £150 per annum valued rent. They are not pounds we know. They are £ Scots.
I am going to ask whoever is to reply for the Government if he would tell me exactly what the Scots £ is worth. I can assure him of this, that from time to time in the history of the two Kingdoms its relation to the English £ has varied considerably, and I think I am right in saying that when I last heard of it it was worth about Is. 8d. At any rate, such is the accumulation of wealth or the lack of it in Scotland—that I leave economists; I do not say Scotsmen, but economists to say—that the value of the Scots £ is comparatively unknown. It is, I believe, uncertain, and, so far as I am aware, it does not appear in our Income Tax legislation anywhere else.
But the position is that the general commissioner, if he is relying on his real estate qualification, not only has to have 1057 £150 Scots per annum valued rate, but, having got it, he has got to keep it, because these provisions are not merely what is the qualification when he assumes office; they hang over his head from time to time, and if the real estate or the Scots £, as the case may be, alters in value, he may find himself one day qualified to act and the next day disqualified from acting, and I invite the attention of the Chancellor to the remarkable peril of the matter from the point of view of the Revenue.
For all the right hon. Gentleman knows, a general commissioner who yesterday was qualified may unwittingly enter upon his office today disqualified, and, being no longer capable of acting, that which he has done may be no longer of any legal effect, and it may quite well be that the Revenue, having regard to what these commissioners do, may find itself unexpectedly deprived of those fruits which it expected to draw, or those advantages which it hoped to gain.
Then, oddly enough, the other Scots qualifications—which, by the way, are higher in the counties than they are in Edinburgh or Glasgow, for some absurd reason, while in England they are higher in London than in other cities—the other property qualifications, the personal estate or the combined personal and real estate are suddenly expressed in sterling, not in £ Scots.
I need not trouble the House by going on with the absurdities of this position, in which these archaic conditions are still required, not merely at the commencement of the office, but held over a man in that capacity while he holds it. I need not repeat again the absurdity of having a qualification because one is the eldest son of someone who had either twice or three times the qualification. This is too ridiculous, and it is no excuse to say that it has been going on so long, and that Government after Government have failed to put it right.
It is certainly no excuse to say that there is a Royal Commission sitting who will attend to the matter. When attention is called to something so completely silly and foolish as this, the moment comes when this House should take some action, as it took action in a very similar case over some of the provisions of the Army and Air Force Annual Bill. This is quite 1058 as bad as anything to which we drew attention then. It is not only archaic and anomalous; it is not only wrong and dangerous; but it is also—and here I speak seriously—most unjust socially that qualifications as high as some of these are should be demanded of people who are performing these public functions. A great many of them are high figures. Also, they are entirely unearned income. It is an absolute property qualification, dating from heaven knows how long ago.
This was considered by the Codification Committee, who were half minded, if I may summarise their Report, to abolish the property qualification altogether. I think there would have been a great deal to be said for doing that. On the other hand, there is something to be said for the proposition that those adjudicating on Income Tax matters should themselves be liable to pay Income Tax in some capacity. Therefore, in drafting this Amendment we followed exactly the form that the Codification Committee recommended; that is to say, that there should be one qualification and one only, and that it should be at the beginning of the term of office irrespective of what happens afterwards.
To put it quite shortly, the person concerned should have had £200 a year, say roughly £4 a week, earned or unearned in the previous year, and having once so qualified, that is the end of the matter. I hope—indeed, I expect—that this skeleton will be withdrawn from the Revenue candelabra—a reference the Leader of the House will follow—and that this simple Amendment will remove a wholly ridiculous, rather dangerous and very wrong provision which has been there far too long.
§ Mr. Houghton
I beg to second the Motion.
I hope that no hon. or right hon. Gentleman will suggest that there is any need to await further consideration of this matter by the Royal Commission now sitting. We have had a Royal Commission which made a recommendation on this very matter 32 years ago, and it is a sobering thought that we have the recommendation of a Royal Commission, 32 years old, which no Chancellor has apparently seen fit to recommend the House to adopt.
The Royal Commission of 1920 recommended that the Commissioners should 1059 act only tor the division in which they reside or carry on business and should be Income Tax payers, but that no property qualification should be insisted on. The Codification Committee, which reported in 1936, did suggest that perhaps it was too sweeping a change to have no qualification whatever, and therefore recommended a minimum income, earned or unearned, which should be the sole qualification for appointment as a general or additional commissioner.
These commissioners are assessing bodies for some purposes and appellate bodies for others, and in these days workers who are claiming small allowances on matters of fact such as claims for deductible expenses to be set off against wages or salaries may have recourse to the additional commissioners to settle the dispute between themselves and the Inland Revenue. It is quite archaic and indefensible that those who move and live among the great mass of Income Tax payers of this country should be denied the right to sit as a general or an additional commissioner.
The general commissioners are drawn from a list compiled by the Land Tax Commissioners, but the property qualification or appointment as a Land Tax Commissioner was abolished by Act of Parliament in 1906, so the Land Tax Commissioners, who are the appointing body, need have no property qualification or appointment as such, but when they select persons to act as commissioners these ridiculous property qualifications have to be satisfied.
The property qualification for the appointment of a commissioner goes back to the day when there was a property qualification for the franchise, and clearly relates to the early part of the 19th century. We want something more democratic and more in keeping with the times, more in harmony with the wide range of direct taxation which brings into its net as direct taxpayers something like 12 million people, eight or nine million of whom are ordinary working folk who have to submit their cases to these local bigwigs, landowners and propertied people when they have a little dispute with the Inland Revenue.
§ Mr. Houghton
I cannot answer for the Chancellor of the Exchequer. Still less can I answer for the House of Commons. All I can say is that, in my small way, I have been drawing attention to this archaic survival of the original Income Tax Act for a very long time. There are quite a few others.
§ Mr. Derek Walker-Smith (Hertford)
Has the hon. Gentleman moved this new Clause before on a Finance Bill?
§ Mr. Houghton
No, I have not moved this new Clause before. But that does not mean to say that I have not had other things to do on Finance Bills. I am sure the hon. Gentleman would be the first to complain if any hon. Member on this side of the House intruded too frequently and for too long upon the time of the House.
I make no excuse for supporting this new Clause now, and I sincerely hope that the Chancellor, whom I now see in his place, will cut this connection with the archaic past, will not wait for Royal Commissions, but will recommend the House to adopt the proposal made by the last Royal Commission, as slightly modified by the Codification Committee of 1936—which was set up, I may add, by his right hon. Friend the present Prime Minister. It took nine years to reach its conclusions, so none can complain that this or any other recommendation was hurriedly arrived at by the Codification Committee.
I sincerely hope that we can make at least one small reform in the whole complex machinery of Income Tax by a more democratic and socially just basis of appointing assessing and appellate commissioners.
§ The Solicitor-General
It might be convenient if I now deal with what has been said in support of this new Clause. I should like to make it clear, first, that I do not rise to defend in any way at all the existing property qualification for general and additional commissioners, which has existed for so many years, including, as has already been pointed out, the last six years.
This, I fear, is only one instance of some of the dead wood which exists in Income Tax law, and which has really been brought to light and brought to the surface by the consolidation of the 1061 Income Tax Acts. Of course, in trying to get the Income Tax law into a clearer, more effective and more up-to-date form the first process has to be consolidation, and it is from consolidation that we can then go on to make improvements in the general structure.
This Clause seeks to abolish the property qualification. The difficulty we feel about it is not the abolition of that qualification, which, I agree, is entirely obsolete, but the form in which the qualifications which general and additional commissioners should possess should now be stated. The House may remember that the Royal Commission which first recommended the rejection of this property qualification in 1918 went on to recommend that the qualification should be that the Commissioners should be payers of Income Tax, and they also went on to recommend qualifications by referance to business or professional standards. That is a matter which. I think, everyone would agree ought properly to be borne in mind.
The Codification Committee in 1936 recommended that the sole qualification should be an annual income of £200 from any source.
§ The Solicitor-General
The effect of a Clause in that form might mean that in certain circumstances the commissioner might not be an Income Tax payer, and to that extent there might be a conflict between the 1918 Royal Commission's Report and the Codification Committee's Report.
§ Mr. Houghton
That possibility existed then, and the Codification Committee dealt with it in their Report. Then, £200 could have exempted some persons from paying tax.
§ The Solicitor-General
It might exempt a great many more people now. We are not at all unsympathetic to the proposal that the property qualification must go, but the difficulty we feel is this: we are not sure that it is right at the moment to accept this simple definition of a qualification. This qualification was considered by the 1918 Royal Commission. It seems desirable that the Royal Commission that is now sitting should have 1062 an opportunity of expressing a view upon this. We feel that there is force in that argument.
This is only one of the matters that want overhauling, and it touches on the wider question of the powers and duties of the general commissioners. Some of those powers which now exist and the duties are obsolete, and it would be much more convenient and much better, I think, to try to tidy all this up in relation to the general commissioners in one Bill rather than to deal with it piecemeal. That is the conclusion to which we have come.
While being entirely sympathetic with the object of this Clause, we feel that it is, in fact, too limited in character to make it possible for us to accept it. We entirely agree with the hon. and learned Member for Kettering (Mr. Mitchison) that this has some of the dead wood which might find a home in that burial ground to which he drew attention.
§ Mr. Mitchison
May I point out that there is one other relevant question which the learned Solicitor-General has entirely omitted to answer? How much is £1 Scots worth? Unless he can give an answer to that there are general and additional commissioners up and down Scotland who may be making awards in the firm belief that they are qualified to do so, and the Crown may be extracting money from taxpayers to which, for lack of this qualification, they cannot possibly be entitled.
§ Mr. Douglas Jay (Battersea, North)
I thought that the Solicitor-General's answer was most disappointing and most unconvincing. When a representative of the Treasury says that he cannot take any action of this type because there is a Royal Commission considering some subject or other, one can be assured that he has no good argument against what is proposed. So it seems in this case. Everybody admits that this property qualification is entirely antiquated and indefensible. I think that it goes back to the time when there was a property qualification for the franchise, and surely we all agree that it is ridiculous, therefore, to preserve that qualification today.
In addition, the new Clause which my hon. and learned Friend the Member for 1063 Kettering (Mr. Mitchison) has moved— and I think that he has done a great service in bringing to light this matter, which I do not remember having been brought to light in the past six years— is simply the identical suggestion, as I understand it, of the Codification Committee of 1936, and it therefore has a good deal of authority behind it.
It is essentially a reasonable and moderate proposal. The Solicitor-General can only bring forward two objections to it. One is that this might have the effect of some persons who are not themselves Income Tax payers becoming commissioners. I do not think that is a real objection to the proposal.
§ The Solicitor-General
The right hon. Gentleman has not stated my view quite accurately. All I was seeking to point out was that there was a possible conflict between the Report of the Codification Committee and the Report of the Royal Commission in 1918.
§ Mr. Jay
As my hon. Friend the Member for Sowerby (Mr. Houghton) pointed out, in reply to that, that was dealt with by the Codification Committee. I do not think we need be deterred from doing what we think it is reasonable and right to do because there may have been a difference of opinion between the Codification Committee in 1936 and the Royal Commission in 1918.
Finally, the Solicitor-General argued that this was only one anomaly among others, and he wished to dissuade us from putting right this limited anomaly because, perhaps, if we did not, at some later time we might be able to make a clean sweep of a whole group of abuses associated with it. I do not find that argument very convincing. I think that we are agreed that this qualification is indefensible, and we have a sensible suggestion for reform, so there is every reason for going ahead, regardless of whether or not we alter various other abuses in the future.
Unless the Solicitor-General or some other spokesman of the Government has some more encouragement to offer us, I feel disposed to advise my hon. and learned Friend to press this proposal to a Division.
§ Mr. Albu
When Amendments or new Clauses are moved during the course of 1064 the proceedings on the Finance Bill there are a series of different types of replies. In some cases, the answer is "No," because it is a matter of policy, and this is generally done when it is a matter of political division between the two sides of the House or Committee.
In some cases, the proposal is said to be drafted in such a way as to give rise to anomalies or to provide loopholes for tax evasion, and, in other cases, that it is not suitable for carrying out its purpose. In the latter case we are told that it cannot be done for administrative reasons, that it will be considered at a further stage, or that it will be considered during the course of the year and brought forward in a future Finance Bill.
It seems that in this case none of these arguments has been adduced by the Solicitor-General. He has brought forward a whole series of arguments, that lots of other changes are really necessary, that it wants looking into further, that there is a Royal Commission studying the whole matter, and so on. But the Clause moved by my hon. and learned Friend is, of course, an extremely simple one, and it would not prevent any further changes taking place in the Income Tax Act in the future.
This Clause is very narrow in its scope, and deals with an archaic, social injustice which everyone agrees is completely wrong and which should no longer exist. I cannot see any argument for not accepting the Clause. No argument has been adduced that it would prevent further changes in the Income Tax Act in future, there are no administrative difficulties and there are no divisions of policy between the two sides of the House. The answer "Yes" would be the simplest way to dispose of the matter, and it would also save time.
I simply cannot understand why the answer "Yes" cannot be given. There is not much case for a property qualification at all. It might be said that the commissioner might not have paid Income Tax the year before he was appointed but it is highly unlikely that any commissioner who had not paid tax would ever be appointed, and, therefore, the dangers in accepting the Clause seem to be minute. I hope that even now, especially after what my right hon. Friend the Member for Battersea, North (Mr. Jay) has said, the Government will 1065 be prepared to accept this small improvement in what is, in many of its Sections, a very archaic Act.
§ Mr. Raymond Gower (Barry)
The hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Sowerby (Mr. Houghton) have unearthed what appears to be an inconsistency but neither of them has alleged that the matter is at all urgent, or, if they have done so, it was obviously just as
§ urgent last year. It would seem that the argument that the Report of the Commission cannot be awaited does not accord with the fact that this has existed so long. It would waste time to have a totally unnecessary Division on a matter which seems to be one of procedure.
§ Question put," That the Clause be read a Second time."
§ The House divided: Ayes, 232; Noes, 249.