INTERNATIONAL WHEAT COUNCIL (IMMUNITIES) (Hansard, 27 July 1953)

§ Mr. Frederick Willey (Sunderland, North)
I do not think there is any quarrel with the purpose of the Order, but we should have some explanation from the Under-Secretary of State for Foreign Affairs in view of the circumstances out of which it arises. The purpose is to give the employees of the International Wheat Council exemption from Income Tax, but what puzzles some of us is why this step should be taken now.
Although it is said in the Order that the United Kingdom is a member of the International Wheat Council, we cease to be a member at the end of this week. The future of the Council is in some doubt, because Australia and France have not ratified and, apparently, it is not known what their action will be until the meeting in Madrid. I much regret the sorry pass into which the International Wheat Council has fallen, but this is not the appropriate occasion to debate that. It is, however, an occasion when we should have an explanation from the Government of why the Order has been laid, in view of the uncertainty as to the future of the International Wheat Council.

§ Mr. Frederic Harris (Croydon, North)
I want to ask a similar point as to why the Order should apply if after the end of this week the United Kingdom is withdrawing from the International Wheat Council. The Explanatory Note says that the Council has its headquarters in London. Is it to continue to keep its headquarters in London? Can my hon. Friend the Joint Under-Secretary give some information on that point?

§ Sir Herbert Williams (Croydon, East)
I am always critical of diplomatic exemptions. Paragraph 2, on the back of the Order, says: 1026 All employees of the Council, except citizens of the United Kingdom and Colonies, shall enjoy exemption from income tax in respect of emoluments received by them as officers or servants of the Council as from the twelfth day of July, 1950. The Council, apparently, sits in London. Therefore, presumably, the people are paid in sterling. They are not, as I understand it, servants of their own Governments; they are not ordinary diplomatic persons. If they are foreigners, they pay no taxation. If they are British, they will pay taxation.
Imagine the case of two people of the same status, in receipt of the same gross salary, one an American or Frenchman or Australian or anything else, and sitting in adjoining rooms. One may have two or three times as much spending power as the other. Are these people who are not citizens of the United Kingdom and Colonies liable to pay taxation in their own countries in respect of an income paid to them in this country by an international organisation which has its headquarters here?
It seems to me a very strange state of affairs. They are not in the position of Ambassadors. An Ambassador, even though he is accredited to the Court of St. James, is theoretically living in his own country. But these people to whom the Order relates are not of the status of Ambassadors and are, apparently, to be free of all taxation here. Will they be free of taxation in their own country?

§ The Joint Under-Secretary of State for Foreign Affairs (Mr. Anthony Nutting)
I will certainly do my best to enlighten the House on the points which have been raised and to give a general explanation of this Order. I was asked by the hon. Member for Sunderland, North (Mr. F. Willey) why we had introduced the Order now. Of course, neither Her Majesty's present Government nor the late Government have an entirely clear conscience on this subject. Both had considerable periods of time in which the Order could have been produced.
As far as Her Majesty's Government and my responsibility are concerned in the matter the answer is that we hoped to be able to bring forward a number of Orders relating to international organisations. As the hon. Member knows there 1027 is one relating to the Universal Postal Union, another relating to the World Health Organisation, another to the International Telecommunications Union, another to N.A.T.O. and other organisations. We had hoped to bring them all together in order to save Parliamentary time and to have a discussion on the whole subject. That has not been possible because those Orders are not ready and, as I shall explain, we are obliged to introduce this Order whilst we are still a member of the International Wheat Council, therefore, before 31st July when our membership ceases.
My hon. Friend the Member for Croydon, North (Mr. F. Harris) asked whether the headquarters of this organisation are likely to remain in London. I cannot give him a definite answer on that. We shall not be members of the International Wheat Council as from 31st July, when our membership lapses, and it will be for the International Wheat Council to decide where its headquarters shall be. No question of diplomatic immunities privileges can arise as far as this country is concerned. We shall not be obliged to grant any immunities or privileges after we cease to be a member whether or not the headquarters of the Council remain in London.
The general explanation of the Order is briefly this. On 27th June, 1949, the late Government ratified the International Wheat Agreement, which had been signed in Washington in March of that year, and under Article XVII (7) of the Agreement the Government accepted an obligation to grant exemption from tax on salaries paid to the staff of the Council if the seat of the Council should be established in this country. This exemption was not mandatory in the case of nationals of the country where the Council was set up, that is, in the case of nationals of this country. Since it came into being in 1949 the seat has been in London and, therefore, the obligation to grant exemption has fallen on Her Majesty's Government. The purpose of this Order is to carry out that obligation.
The draft Order is to be made under the International Organisations (Immunities and Privileges) Act, 1950. This Act provides, as the House is aware, in Section 1, subsection (1) that it may only be applied in the case of organisations of which this country is actually a member. 1028 Since we cease to be a member of the International Wheat Council on 31st July, when the present Agreement expires, this Order must be made before that date. If it were not there would be no power to make it thereafter.
I am well aware that no diplomatic immunities Orders are ever popular on either side of the House, or for that matter, in another place, but I hasten to reassure my hon. Friends and hon. Members opposite that the practical implication of this Order is in fact very modest. The International Wheat Council employ what I think can be described as a very small staff. There are at present 17 members in this country, of whom 14 are citizens of the United Kingdom and Colonies and, therefore, untouched by this Order. Since the Wheat Agreement places no obligation on Her Majesty's Government to exempt their own citizens from tax and since the Act of 1950 specifically debars United Kingdom citizens from being given exemption, unless the agreement requires it, the Order only applies to Commonwealth and foreign members of the Council's staff. But there are only three such people at present employed on the staff. One is an American national paid by the United States Government, and not by the Wheat Council. He is exempt from paying United Kingdom Income Tax by Section 462 of the Income Tax Act, 1952.
Thus in effect the Order applies only to two present employees of the Council. Of the former Commonwealth and foreign employees only one is still resident in the United Kingdom. Therefore, in practice, this Order will benefit only three persons, two present employees and one past employee of the Council. I was asked by my hon. Friend the Member for Croydon, East (Sir H. Williams) about the position of foreigners and Commonwealth citizens who enjoy exemption under this Order, and whether they pay Income Tax on salaries in their own countries. I cannot answer for the Income Tax law of other countries. That is a matter for those other countries. Be they Commonwealth or foreign, this Order in no way exempts any Commonwealth or foreign citizen who is or was a member of the International Wheat Council staff from paying Income Tax in his own country. It applies only so far as United Kingdom Income Tax is concerned.
1029 I cannot say exactly what the concession will cost the Exchequer—only a few hundred pounds, certainly less than £1,000. The important point, however, is that by not making the Order Her Majesty's Government would be in breach of an international obligation under the International Wheat Agreement. This is a matter of principle, and whatever the size of the sum involved, this Order is necessary to discharge our international obligations. I hope that, with this explanation, the House will approve the Order.

§ Captain J. A. L. Duncan (South Angus)
Is it clear or is it not whether this Order will lapse on 31st July?

§ Mr. Nutting
The Order will not lapse but the power under the International Organisations (Immunities and Privileges) Act, 1950, to make the Order will lapse on 31st July because on that date we cease to be a member of the International Wheat Council, and the Act provides that we can only make an Order of this kind—or of any kind—for diplomatic immunities or privileges in respect of an international organisation of which we are actually a member.

§ Mr. George Brown (Belper)
Does the Order have continued effect?