§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. Gaitskell
This is a Clause which has never really been explained. If the Financial Secretary could, in a few words, explain exactly what advantage is gained by the various clubs concerned, it would be for the convenience not only of the Committee, but of the country generally.
§ Mr. Boyd-Carpenter
I agree that the Clause looks somewhat formidable in the Bill and, therefore, I gladly respond to the right hon. Gentleman's invitation to inflict a somewhat technical discussion upon the Committee.
The object of the Clause is to clear up what a recent issue of the "Economist" described asthe mighty muddle about the entertainments tax on season tickets.Under the original provisions of the Act of 1916, under which Entertainments Duty was introduced, the tax on a season ticket was calculated simply in relation to the cost of the ticket. As at that time the Entertainments Duty was of a regressive nature—that is to say, the proportion of the total taken in tax diminished as the price rose—that was to the advantage of the season ticket holder, and no complicated provision of this sort was necessary. Under Section 3 of the Finance 2213 Act, 1944, however, the incidence of the tax was varied so that it became in general a progressive tax—that is to say, with the burden rising proportionately as the figures involved increased.
The framers of the 1944 Act appreciated the consequences of that in the case of season tickets and they tried to provide for the situation by a provision whose intention was that where a season ticket was issued, the duty should be calculated on the basis of the number of tickets as individual and separate tickets that the season ticket represented. To take a simple illustration, a season ticket costing £2 and relating to 20 entertainments, would be calculated on the basis of 20 2s. entertainments.
Certain considerable practical difficulties have, however, arisen in the operation of the provisions of the 1944 Act. In particular, it has been found that the restrictive provision—that it only applied where the rights given by the season tickets were the same as those given by individual tickets—has caused a good many of the clubs not to be able to bring their arrangements within the provisions of the 1944 Act. To take another example, a number of the clubs provide that season ticket holders occupy a particular part of a stand, which is open only to season ticket holders. That has been held to be not the equivalent to individual tickets which do not admit to that part of the stand.
In view of that, a great many of the clubs were unable to come within the Act of 1944. A test case, which the right hon. Member for Leeds, South (Mr. Gaitskell) may recall—
§ Mr. Boyd-Carpenter
I see that the hon. Member for Bristol, South (Mr. Wilkins) recalls it—the Queen's Park Rangers case—was heard last year. It was—I say it with all respect—unfortun-ately, from a practical point of view, decided on rather narrow grounds. The effect of the decision was that the benefits of the 1944 Act applied only in cases where the make-up of the season ticket was a small booklet, from which a slip was torn off in place of each ticket. The effect generally was that where the ordinary season ticket was simply a piece of cardboard which was issued, the benefit of the provision did not apply.
2214 11.0 p.m.
This Clause is designed to clear up that position, and the substance of it, broadly—and subject to the limitations of paragraphs (a) and (b) of subsection 1 —is to make the benefit of the 1944 Act and the Queen's Park Rangers decision applicable to all season tickets which come within the general provisions of the Clause. That is to say, they have to relate to entertainments which take place within one year, and the lump sum must constitute full payment for admission to each of the entertainments in respect of which it is paid. The remaining parts of the Clause which, at this stage, I do not think I need trouble the Committee with discussing, are for the purpose either of preventing one fairly obvious method of evasion, or are largely formal.
The substance of the matter is that the benefit which was intended under the 1944 Act should be given; that is to say, where a season ticket is issued the duty paid is calculated not at the fairly high figure which the total cost of the ticket would carry if taken by itself, but it is broken down so that it only reports the aggregate of the amount of duty which would be paid on the number of individual tickets for entry to this particular number of entertainments. The purpose, generally speaking, is that advantage shall be given on all season tickets.
It appears that this will be of advantage to a considerable number of sports clubs in the association and Rugby League fields. I can assure the Committee that to the best of our knowledge no one will be worse off through the provisions of this Clause, and a certain number of people will be appreciably better off. If hon. Members are interested I have available a number of examples of the extent to which the amount of duty payable will be reduced, but I think I can summarise them by saying that the reduction will be appreciable in a number of cases.
§ Mr. Wilkins
We are grateful to the Financial Secretary for that explanation, and for the way this matter has been dealt with. Just one point arises. It is true that some clubs have one card which constitutes a season ticket, but there are many clubs which have books of tickets with duplicates from which a part is torn 2215 off. Queen's Park Rangers, who won their case, simply had a line on which was indicated the price of the ticket. Many clubs, although they used the same kind of ticket, because they did not have that one item, were unable to make a claim. Will it now be possible for clubs with that type of ticket, but with the line I have mentioned omitted, to make a claim for last year?
§ Mr. Boyd-Carpenter
There is no provision in the Clause for retrospection. It is brought into effect from 26th April, together with the other changes in the Entertainments Duty.
§ Clause ordered to stand part of the Bill.