§ The undertakings described in paragraph (b) of subsection (1) of section eight of the Income Tax Act, 1945, and in paragraph (b) of subsection (1) of section two hundred and seventy-one of the Income Tax Act, 1952, shall include and shall be deemed always to have included the Mersey Tunnel undertaking otherwise known as Queensway.—[Mr. Bevin.]
§ Brought up, and read the First time.
§ Mr. J. R. Bevins (Liverpool, Toxteth)
I beg to move, "That the Clause be read a Second time."
This refers to a relatively parochial matter and I will put the case as briefly as possible. As hon. Members know, the Mersey Tunnel is one of the finest pieces of engineering in this country, besides being one of the most remarkable examples of municipal enterprise. I resist the temptation to say which political party conceived and executed it. This undertaking between the years 1934, when it was first opened, and 1950, was not liable to Income Tax. In 1950, however, two factors—notably the increase of traffic revenue and also the increase in interest of investments—combined to produce a taxable surplus for the undertaking.
When that occurred about two years ago it was discovered for the first time that, according to the strict letter of Income Tax law, the undertaking was not entitled to the normal depreciation allowance on buildings and structures of 2 per cent. Many hon. Members of the Committee will know that, according to Section 8 of the Income Tax Act, 1945, industrial buildings and structures are defined by these words:… The expression 'industrial building or structure' means a building or structure in use … (b) for the purposes of a transport, dock, inland navigation, water, electricity or hydraulic power undertaking ….1278 It was definitely the view of the Board of Inland Revenue that, for certain reasons which were considered good by them, the Mersey Tunnel did not fall within this definition. When the matter was referred to the Treasury, it was suggested that the undertaking should make representations to the Millard Tucker Committee which was then sitting. I should like to quote two sentences from the Report of that Committee on the subject matter of this new Clause. They reported that:The Mersey Tunnel does not strictly come within this description"—that is, the description of an industrial structure or building under Section 8 of the Income Tax Act—and accordingly no depreciation allowance is due under existing law. Its exclusion appears, however, to have been due to an accident of drafting rather than deliberate intention. The Mersey Tunnel is, in our view, as much entitled to an allowance as many of the concerns which fall within the definition …. We recommend that the same treatment should be given to the Mersey Tunnel as is given to buildings and structures which fall under the definition of industrial buildings.The purpose of this new Clause is not to absolve this undertaking from the liability to Income Tax, but merely to remove what we regard as an untenable anomaly.
§ Mr. John Tilney (Liverpool, Wavertree)
I rise to support what has been said by my hon. Friend the Member for Toxteth (Mr. Bevins). The ratepayers of Merseyside have suffered for a long time through laws which are more of a sleight-of-hand in drafting rather than of the underworld, but they have robbed them of allowances which other similar bodies of an industrial and transport nature have been given in the past.
The odd situation arises whereby the ratepayers of Liverpool may have to pay rates to a body which is itself exempt from rates, but which may use the rates of Liverpool to pay national taxation in the form of Income Tax, Profits Tax and even the Excess Profits Levy. All the ratepayers of Merseyside hope that the Chancellor will see fit to accept this Amendment.
§ Mr. Mitchison
I believe that the great event of a reply from the Minister of State for Economic Affairs is about to take place, and I would not delay such an auspicious moment for long, but I should 1279 like to know one thing. Does the Merseyside Tunnel levy tolls and is that how this question has arisen? Also, do not other tunnels depreciate and why should the Mersey Tunnel be singled out in this way and not the Blackwall Tunnel, for instance? Perhaps that is purely a financial question, but again might I ask, is it certain that tunnels do depreciate or do they not improve by keeping?
§ Mr. William Keenan (Liverpool, Kirkdale)
I only rise because of the remarks made by my hon. and learned Friend the Member for Kettering (Mr. Mitchison). The local authorities at Birkenhead and Liverpool undertook a tremendous task in making this great tunnel. It was an outstanding engineering feat and proved invaluable to the country during the war, saving many millions of pounds. There is a difference in the case of the Mersey Tunnel compared with some others, because of the liability of both Birkenhead and Liverpool, which paid a 4d. rate right up to the war. Surely it is desirable thing that such a public asset, provided by the initiative, foresight and national outlook of the local authorities in Liverpool and Birkenhead, should no longer be called upon to pay Income Tax from the rates.
§ Sir A. Salter
My hon. Friends and the hon. Member for Kirkdale (Mr. Keenan) have put up such a clear and convincing case that I do not think it is necessary for me to take up the time of the Committee on the subject. As to what the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) said, I think the Committee would be satisfied to be reminded that this was a case which was gone into very fully by the Tucker Committee, and they recommended that treatment given to the Mersey Tunnel should be the same as that given to buildings which came under the definition of an industrial building.
We are convinced by the case which has been put before the Committee. We cannot accept the Clause in the precise form in which it is drafted, and we cannot make any arrangements for it to be retrospective. We will, however, undertake on the Report stage to introduce a Clause which in substance will give effect to the recommendations of the Tucker Committee.
§ Mr. Keenan
As the matter has been looked upon in the way it has, I am sure that the authorities will be very grateful.
§ Mr. Bevins
In view of the very full assurances given by the Minister, I beg to ask leave to withdraw the Motion.
§ Motion, and Clause, by leave, withdrawn.