HC Deb 17 March 1953 vol 512 cc2044-7
17. Miss Burton

asked the Chancellor of the Exchequer how many people, of working age and over, were not liable for payment of Income Tax at the time of the last Budget and how many of these were old age pensioners.

Mr. R. A. Butler

The number of people with incomes above the Income Tax exemption limit of £135 who were not liable to tax at the time of the last Budget was about 4¼ million. The Budget itself removed a further two million from liability. No information is available about the number of people with incomes below the Income Tax exemption limit or about the number of old age pensioners who were not liable to tax.

Miss Burton

In respect of those 4¼ million people who are not liable to Income Tax—if they are not old age pensioners and do not thereby gain the mythical benefit about which the Government repeatedly tell us—would the Chancellor say how those people, if they have not three children, are expected to meet the increased cost of living?

Mr. Butler

We have been over this ground several times before. The hon. Lady knows that the variety of benefits conferred by this Government has, in the end, helped these people a great deal.

33. Mr. Gaitskell

asked the Chancellor of the Exchequer why he ruled that proposals, on the lines advocated by the late Professor Irving Fisher, that the individual's liability to Income Tax should be reduced to the extent of his savings out of income and increased to the extent of his expenditure out of capital, were outside the terms of reference of the Royal Commission on the Taxation of Profits and Income.

Mr. R. A. Butler

In essence, the proposals in question would amount to a tax based on individual expenditure. I could not regard consideration of a general scheme for such a tax as properly falling within the scope of an inquiry into the system of taxation of profits and income. Moreover, it seemed to me impossible to carry through the examination of such a scheme without also inquiring into the scope and purpose of indirect taxation which enters largely into much personal expenditure, and such an inquiry would embrace matters far removed from the concept of a scheme of taxation based on profits and income.

Mr. Gaitskell

Is the Chancellor aware that his reasons for turning down this suggestion are rather unconvincing in view of the fact that there is clearly a close relationship between Income Tax and expenditure? Would not he agree that it is extremely desirable that the Royal Commission should turn their attention to ways and means of altering the system of Income Tax in order to encourage saving and discourage dissaving?

Mr. Butler

I have already informed the Royal Commission in the sense of the answer I have given the right hon. Gentleman, namely, that I do not consider that this matter, largely due to the associated consideration of the indirect taxation aspect, falls within their terms of reference. I am afraid that I cannot go back on that decision.

Mr. Gaitskell

As I have pointed out, the argument on which the Chancellor turned down this suggestion applies equally to Income Tax, and I would ask him to reconsider this matter. The question of savings is extremely important and I should think he would desire to encourage more personal savings. Would he, therefore, look into the matter again and reconsider it to see if he cannot give a different reply to the Royal Commission?

Mr. Butler

No one denies that this is a very interesting and rather intricate subject upon which certain people are specialising at the present time. I must adhere to my view that this is not a matter which I can add to the remit of the Royal Commission, however important it may be.

Mr. Roy Jenkins

Is the Chancellor not aware that his action, first, in trying to appoint Lord Waverley, who is hardly impartial in these matters; second, in saying that the Commission may consider the total level of taxation, which is essentially a political matter; and third, in ruling out this question, which is essentially a technical matter, arouse a suspicion that he is trying to use the Commission as a political instrument?

Mr. Butler

I should have thought that right hon. and hon. Gentlemen opposite would have been thoroughly ashamed at referring back to the episode of Lord Waverley, when they cast an unnecessary slur on one of the major public figures of this country. On the other question, I have no reason to believe that the Royal Commission are dissatisfied, in general, with my decision. Let us look at it quite humanly: they have quite enough to do to give a report, in the independent manner in which they will give it, on what has been put to them without adding anything further.

Mr. Gaitskell

Is the Chancellor aware that he has completely misunderstood our attitude towards Lord Waverley's appointment, that at no time did we cast any personal reflections on Lord Waverley, but that we considered, in view of his record of public utterances on the subject, that it was inappropriate that he should be chairman of this Royal Commission? Is the Chancellor not aware that his refusal to allow the Commission to consider the proposal mentioned in my Question leads us to the view that he must be very anxious that they should not consider the imposition of a tax on dis-saving, in which case he is using his power as Chancellor of the Exchequer for a very unworthy purpose—namely, for political ends.

Mr. Butler

The subject raised by the right hon. Gentleman is one of intense technical complexity which would very much widen the scope of the remit to the Royal Commission. I think he is grossly exaggerating the situation for what seem to me to be largely political purposes.

Mr. Gaitskell

How, then, does the Chancellor expect the Commission to give any consideration to the problem of encouraging savings by amending the Income Tax system?

Mr. Butler

I do not think that the consideration, in general, of savings is confined to the approach suggested by the right hon. Gentleman.