§ Easter offerings made to clergymen or other ministers of religion shall not be regarded as income for any of the Income Tax Acts for any future year of assessment.—[Mr. D. Marshall.]
§ Brought up, and read the First time.
§ Mr. Douglas Marshall (Bodmin)
I beg to move, That the Clause be read a Second time.
I do not think that the argument in favour of the Clause is completely unknown to a great number of hon. Members. On many occasions the Clause has been described as a hardy annual. The argument I want to put before the Chancellor of the Exchequer is a good one, 836 although I will not profess that, looked at purely as an audit argument, it would appear to be a good one. Without overstating the case, however, there is a balanced argument whichever way one reasons on this Clause.
No doubt the Chancellor will readily remember the discussion that took place in the House of Commons in the early hours of the morning in 1946. After an all-night sitting it started about 7.15 a.m. and a Division was called about 9.15 a.m. As was customary then, my right hon. Friend who is now Prime Minister, who was very assiduous in his duties and stayed up through the long night, advanced a powerful argument on behalf of a similar type of Clause, with the exception that there was a limit of £50 to the amount which it was sought to exempt from tax.
It so happened that an hon. Gentleman opposite, no longer a Member of the House of Commons, argued in a reverse manner, although previously, in 1943, he had voted for a similar Clause, and the Prime Minister of the day said:… whether it is the road to Damascus or the road to promotion, I do not know."—[OFFICIAL REPORT, 24th June, 1946; Vol. 424, c. 992.]The argument which the Prime Minister used on that occasion is one of the best that can be used in support of this Clause—
Mr. H. Wilson
Could the hon. Gentleman disentangle his Prime Ministers? We are getting confused. He referred to the argument used by the Prime Minister of the day. Was it the Prime Minister of this day, speaking on that occasion?
§ Mr. Marshall
I am sorry if I have confused the right hon. Gentleman. Each time I mentioned the Prime Minister, I meant the present Prime Minister.
The right hon. Gentleman and hon. Gentlemen opposite are aware that for sixty years Easter offerings did not attract tax. When different cases went through the courts, the judge of the High Court and the judge of the Court of Appeal ruled to that effect. Then, at a later date, an appeal was heard in the other place, a legal argument altered that view, and from that date the gifts made for Easter offerings attracted tax.
It can be argued that it cannot be a very strong argument for the Inland Revenue to suggest that it would be 837 extremely complicated to unravel this affair so that Easter offerings should not attract tax if, in fact, there was an argument at a high level to the effect that they should not attract tax. Consequently, I feel that this in itself is a powerful argument for such offerings not attracting tax.
Although, in the proposed Clause, there is no limit to the amount set, I am sure that hon. Members who have associated themselves with me in the proposed Clause will feel, as I do, that if the principle is accepted by the Chancellor in some form, perhaps with a limit, there would be no objection to that. On the other hand, it is my belief that it would not be worth while making the approach purely by putting a small limit upon it when the total sum of money is not likely to be large.
Hon. Members no doubt know very well the form of argument which has frequently been used in defending this type of Clause. It is that if anyone likes to give an incumbent a cheque at a time other than that of Easter offerings, and it is merely as a gift, it does not attract tax. Consequently, it becomes ridiculous that such a form of subterfuge should have to be resorted to from time to time to correct a situation which a great number of people think ought not to exist.
After all, when people go to their place of worship on Easter Sunday to give what they feel disposed to give as an offering to their minister, surely it is wrong, when it is known that the recipients have not a great amount of money, that taxation should be imposed upon what is nothing more than a gift.
I feel comforted by the fact that in 1946, and again in 1948—on that occasion Sir Patrick Hannon and I acted as Tellers —we were supported by many hon. Members who are present tonight. The supporters included the present Minister of Agriculture, Fisheries and Food, the Economic Secretary to the Treasury, the Minister of Pensions and National Insurance, and the Foreign Secretary.
I therefore trust that the force of the argument will have a softening effect upon the Chancellor. I feel that this year we have our last chance, so I hope that my right hon. Friend, in spite of the arguments which the Inland Revenue has advanced for a very long time, will accept our case and do something about it, believing that the people would think it 838 right that he should in some measure accept the principle underlying the Clause.
§ Brigadier Prior-Palmer
I support the proposed new Clause. I had tabled a similar Clause which has not been called. For two reasons, I did not go as far as my hon. Friend the Member for Bodmin (Mr. D. Marshall) has gone. First, I felt that there are some parishes which are so rich that they are not affected or worried by this matter. Secondly, I felt that if one asked for something small one might be more likely to get it. Nevertheless, I support the Clause before the Committee.
It is difficult to define "charity", or to find any real definition of a "charitable gift". There is an Elizabethan Statute dealing with charitable uses which has been referred to ever since it was introduced, but a large number of very curious items are enumerated in it, and they are not confined only to charitable intent. During the course of time the definition of "charity" has become wider and wider. For example, on one occasion it was described as the promotion of temperance, and Income Tax relief for it was given.
The definition has also covered the performance of choral work and the provision of regimental plate. If the provision of regimental plate can be regarded as a charitable matter, I should have thought that the plight of the clergy, who, faced with the rising cost of living, find it increasingly harder and harder to carry out their duties without worry, and who sometimes are sore put to it to find three meals a day, was an even more pressing subject for consideration in this direction.
It is entirely wrong that well-meaning and normally upright people should be driven to descend to all sorts of devices to try to circumvent the law in the interest of religion. It really is high time that this anomaly was wiped out and that these good people who give their lives to teach religion in return for a very small pittance indeed should be given a square deal.
§ Mr. E. Fletcher
I wish to support the new Clause. For a long time I have thought it a blemish on our fiscal arrangements that Easter offerings are taxed. As the hon. Member for Bodmin (Mr. D. Marshall) pointed out, that was not the 839 case for some sixty years. It is only by a comparatively recent decision that Easter offerings to ministers of religion have fallen within the Chancellor's net. The Chancellor knows perfectly well that there is a very large volume of opinion on both sides of the Committee, among people of all denominations and among those of no denomination, that the taxing of Easter offerings is something inconsistent with the highest traditions of this country.
Ministers of religion are not well off. They are one of the hardest-hit sections of the community. They are not organised as are some other sections of the community, which enables them to protect themselves against rising costs, inflation, and so forth. Every one of us, I suppose, knows a minister of religion, perhaps several, who, if not living in penury, are living in very straitened circumstances, but who because of the noble calling to which such men belong, and because of the Christian principles which they uphold, do not complain.
This Clause is being moved for humane and Christian motives by people who are very sensible of the conditions under which, unfortunately, a large number of clergymen in this country live. It is high time that the Chancellor recognised the justice of this claim. It is true that the matter has been debated before, and no very Convincing arguments have ever been adduced against the merits of this Clause. We have heard it said that there are administrative reasons which make such a concession difficult, that it might open the door to other concessions.
I do not believe that. I believe that it would be quite easy to limit this concession to ministers of religion and, if necessary, to limit it to Easter offerings. The Chancellor will know that the Easter offerings by parishioners are a tradition going back many centuries. The rich man makes his gift and the widow contributes her mite. All those contributions are brought within taxation. It is felt to be almost indecent and repulsive that the more generous people are to their pastors at Easter time the more goes into the Chancellor's pocket. That is not the idea of these contributions.
In other respects the Chancellor has, in this Finance Bill, shown himself refreshingly—if that is the right word— 840 indifferent to the views of the Inland Revenue on matters of major importance, such as the taxing of overseas trade corporations; therefore, he should be the last person in this Committee to give us any trumped-up arguments based upon Inland Revenue briefs. We want the Chancellor to exercise his own judgment fearlessly, and to over-ride any Departmental prejudices that exist in this minor matter as he has done in regard to major ones. If he accepts the Clause he will be doing himself honour and remedying a longstanding grievance and injustice.
§ Sir C. Mott-Radclyffe
I hope that the Chancellor and the Committee have listened carefully to the very moving appeal made by the hon. Member for Islington, East (Mr. E. Fletcher). There are one or two points which should be made about the new Clause. The fact that it has become known as the hardy annual Clause, and has been discussed four or five times in recent years, does not make it any the worse.
I agree with the hon. Gentleman that of all sections of the community it is the clergy who have probably been hardest hit in the last twenty years. I challenge anybody to deny that the clergy have suffered a tremendous drop in their standard of living. One finds them in the country eking out a very difficult existence in enormous vicarages, with large gardens full of weeds; perhaps with a wife and young children; and no domestic help, with less money coming in at the end of the week than many of their parishioners living in council houses or agricultural cottages who have no need to try to keep up appearances.
But that is not the strongest argument in favour of the Clause. The Chancellor may quite well follow the example of his predecessors and say, "If the clergy are underpaid it is up to the Church as a whole to do something about it," but the real argument in favour of exempting all or part of the Easter offering from tax is a slightly different one.
I do not think that it is right that a gift made voluntarily without any compulsion at all, by parishioners to parish priests on Easter Sunday. should attract tax. The days are gone when the Easter offering was compulsory in many parishes. I do not believe that it is now very often possible to say with accuracy what the 841 Easter offering will amount to in a given parish. Figures are published which in my view bear no relation to reality.
I know of parishes where the Easter offerings vary by as much as 50 per cent. from year to year, depending upon whether Easter is early or late, and upon the size of the congregation on the day. The Easter offering can no longer be said to be a certain amount which can be regarded as part of the yearly salary of the incumbent. In the first sixty years of Income Tax—from 1844 to 1907—the Easter offering was not considered subject to tax at all.
I ask my right hon. Friend to think carefully about the absurd anomalies which have arisen from the fact that the Easter offering attracts tax and, as in past years the standard rate of Income Tax has gone up, the anomalies have become more absurd. If I give the parson a turkey at Christmas, he does not have to pay tax on its value. Were I to give him a cheque at Christmas with which to buy a turkey, he would not have to pay tax on the value of it. Similarly, if I gave him a cheque on Easter Sunday to help towards the cost of his summer holiday, he would not have to declare the amount for Income Tax purposes. But if I put £1 into the offertory plate on Easter Sunday, that could attract tax at the standard rate. It seems to me to be completely absurd.
I have been studying what has been said about this matter in the debates which have taken place since the war and I find that the clergy have been bracketed with some rather odd types. They have been classed with waiters, jockeys, and others, who are supposed to return the value of tips which they receive in order that the amount may be assessed for tax purposes. I wonder whether all the waiters make a correct return of all their tips, or whether the postmen who receive presents on Boxing Day make a return of them.
Many employers make gifts to their employees at Christmas which do not have to be returned for tax purposes, and I cannot believe it is right that the gifts made to a parish priest on one of the two great festivals of the Christian Churches, as a kind of token of regard for his work throughout the year, should be taxed. It does not seem decent or dignified that such money should attract tax. I should 842 like my right hon. Friend to state what would be the cost of exempting the whole of the Easter offering or, as is suggested in another new Clause in the name of myself and some of my hon. Friends, exempting the first £75. I beg him to think carefully about what we are asking, because I am sure that if he does so he will see that it is not unreasonable.
§ Mr. P. Thorneycroft
It might be convenient if I said a word about this Clause now. As was said by my hon. Friend the Member for Bodmin (Mr. D. Marshall), this is not a new debate. This matter has been debated over and over again. A few hon. Members must have voted both ways on this question during the course of their parliamentary careers. When I came to the Exchequer I was conscious that I should be confronted with this matter, so I have given some thought to what is the right thing to do.
So many speeches have been made in the past on this subject by so many Chancellors that every possible argument has been adduced and they are all well known. Over the years they have been regarded by successive committees which have considered this matter as irresistible arguments against this reform. But I am not satisfied that that should necessarily be the end of the matter—[HON. MEMBERS: "Hear, hear".] Hon. Members should not anticipate too much.
The arguments for this reform are that this is a personal gift; that it is very often a gift to a man in very poor circumstances, and that there is something distasteful in taking tax from it. On the other hand, the short point in favour of the tax is that the gift is part of the minister's income; and that these clergymen do, in fact, receive part of their income as voluntary gifts. It matters not when the gift is made, whether as an Easter offering or as a cheque at any other time. As part of the clergyman's income it is liable to tax.
One cannot dismiss lightly an inroad into that provision; many other people get their incomes in that way. In any event, I do not think there would be any case for Easter. The Churches vary very widely. Some give gifts of this kind at Easter; other make a habit of it at Whitsuntide. Many do not make a habit of it at all. The Church of Scotland and the Free Churches do not deal with the 843 matter in that way. Nevertheless, the fact remains that in any denomination these are not very wealthy people.
§ Dame Irene Ward (Tynemouth)
On small fixed incomes.
§ Mr. Thorneycroft
The trouble is that the proposed provision would be of least help to the poorest. My hon. Friend the Member for Tynemouth (Dame Irene Ward) reminds me of another point that should be made in this connection. If one is to give relief on, say, the first £75, one is dealing with people who are barely within the Income Tax range at all.
In any event, I have been pondering on these matters and have been considering what the Royal Commission had to say upon the subject of taxation of the clergy. It made the suggestion that the annual value of Church of England parsonage houses should cease to be attributed to the incumbent as income, and that the restriction of the exemption from taxation in respect of lands and properties owned and occupied by charities, which is imposed by Section 448 of the Act of 1952, should be repealed. That was an aspect of the matter which could not be entirely dismissed.
I took the opportunity of discussing the problem with representatives of the Churches, because we want to have the views not only of the Church of England but of other Churches. It is unrealistic to think that we can consider one denomination in isolation. What impressed me was that all Churches thought that something should be done, but each would benefit from a different type of relief. In some cases, relief on the first £50 of the Easter offerings might be of assistance. Others attached importance to some adjustment in the expenses arrangements for clergy. That is a difficult thing to do in isolation from other people. Other denominations felt that some relief on account of Schedule A would be of benefit. They all emphasised that some form of tax adjustment would be of assistance to them.
It would not be satisfactory to deal with this matter piecemeal, as it raises different points of taxation principle. Before the next Budget, I will closely study all these proposals and see whether, without violence to long-established 844 principles, it is possible to give effect to the desire to assist and encourage ministers of religion and the churches generally. I cannot make any promises, but I will see whether anything can be done. In the course of the review I will consider the remarks which have been made during this debate.
This is not so simple a matter as it seems. It is not really right to make a rule in this respect in reference to matters which, perhaps might benefit considerably one denomination, without considering others. The Committee may well think that I am right in seeing the Churches and having a talk with representative bodies to see what the possibilities are. I should like a little time, between now and the next Budget, to talk matters over with them in order to see whether it is possible—I do not make any promises—for us to do anything to help.
Mr. H. Wilson
The whole Committee will wish to welcome what the Chancellor has just said, so far as it carries with it a very specific promise to examine this matter seriously, with a view to doing something next year. I think also, speaking, at any rate, for myself—and I am sure that I carry a number of hon. Members on both sides with me—that we welcome the fact that he is looking at this in a wider denominational setting than is represented by the specific new Clause we have on the Notice Paper. I am sure that that would be widely welcomed.
All of us have felt for a very long time that something should be done. We are all impressed by the arguments which have been produced by successive Chancellors, emanating from the Board of Inland Revenue, in various debates. Certainly, in theory, there is great difficulty in accepting the new Clause.
The Chancellor has fairly said that the matter has been put by Chancellors of different parties over a considerable period of time. Indeed, the present Prime Minister, we were reminded tonight by the hon. Member for Bodmin (Mr. D. Marshall), himself pressed very strongly for the acceptance of a new Clause on similar lines many years ago—from this side of the Committee, of course.
We should have wanted to know, I think, in other circumstances, but for the Chancellor's speech, whether the present 845 Prime Minister had been converted from that point of view, or whether the Chancellor was breaking loose from the Prime Minister. But the way that the Chancellor has put it enables us to avoid that kind of difficulty.
The Chancellor is quite right, in my view, speaking as a Nonconformist, in saying that what would meet the views of hon. Members on both sides of the Committee who have spoken to this new Clause would be of little or, indeed, no use for certain other denominations who have their financial problems and their very specialised tax problems. We are all glad that he has had talks with the representatives of the churches generally about the matter and has undertaken to keep in touch with them in the future.
Yesterday, I happened to be at a joint service—a very rare thing—representing all the denominations in the Hampstead Garden Suburb, which was celebrating its jubilee, at the parish church in the constituency of the hon. Gentleman the Member for Hendon, South (Sir H. Lucas-Tooth); I do not think that he was at the church, but no doubt he had a good reason for not being there. I remember that, as we came out, in chatting to one or two of the people there from more than one church, I brought up the question of this new Clause that we are debating tonight. It was quite clear then that it would have a value very different for some of those attended that service from what it would have for others. There is a serious problem in regard to the occupation of manses, as I think the right hon. Gentleman knows; and this has been mentioned this evening.
The right hon. Gentleman has undertaken to look at the matter between now and the next Budget. I do not think that it would have been a case for the appointment of a committee to go into it. It is necessary to find out what the needs and requirements are, find out what will give the greatest benefit and the greatest equity as between the different Churches, and then take a view about it. So far as any committee could look at it, that was done by the Royal Commission.
I think that the Chancellor is right, on this occasion, not to set up any special inquiry. I would, however, ask him to consider whether it would not be a good thing—there is no big point in it, and there is not likely to be a great gamble 846 on the Stock Exchange on the consequences of any decision—to associate representatives of the other parties in the House in the discussions. I do not ask him for a reply tonight, but I should like him to consider that.
None of us wants this issue to become a party issue, and, if possible, we want to avoid it becoming too much a denominational matter. Above all, we do not want within the House of Commons to feel that certain denominational views are more likely to be pressed from one side of the House than from another on this matter. The Chancellor would not lose anything by accepting that suggestion and we would help to get away from the situation about which all of us are a little concerned and on which the Chancellor, with great frankness and some degree of cynicism, commented when he said that there were some hon. Members who voted both ways on this issue, suggesting that it was not any conversion which caused them to change their view, but the question on which side they were sitting.
Perhaps the right hon. Gentleman might be able to associate right hon. and hon. Members from other parts of the House of Commons in these discussions so that, if possible, we can take this issue out of politics and out of future Budget debates and devote ourselves to the other Clauses that will be on the Notice Paper in successive years.
§ Mr. Nicholson
I think it right for somebody on this side to thank my right hon. Friend the Chancellor for going as far as he has done. There are, however, one or two points that I should like to make. First, this is no new problem. Chancellor after Chancellor has had these cogent arguments put to him and nothing has been done. I hope my right hon. Friend will realise that it takes a considerable act of faith on our part to accept as satisfactory a vague pledge that he will, at least, look at the matter without saying that he will do anything definite. He is drawing a large cheque on our bank of faith and I hope that he will honour it.
Secondly, there is the more serious consideration that for years and years every section of the House has wished for this reform, but nothing has been done about it. There is something seriously wrong constitutionally when the 847 universal will of all parties in the House of Commons is consistently ignored by the Chancellor and the Treasury representatives. Although it may seem trivial, it is a serious constitutional matter that the will of Parliament and of the country has not been carried out.
I hope that my right hon. Friend will regard this matter as one of high priority and of the greatest importance. Having said that, I do not wish to appear ungenerous. My right hon. Friend has come much further much faster than any of his predecessors have done and I welcome it. I hope he will realise that this is a very serious matter indeed.
§ Mr. Ede
I should like to thank the Chancellor of the Exchequer for the wide view he has taken of this matter. One of the difficulties that confronts those of us who belong to some of the smaller Nonconformist denominations is that the case that has been put forward tonight on behalf of the new Clause does not touch our problems at all.
We have to make regular weekly contributions of small sums for the maintenance of the ministers of our Churches. The idea of one special Sunday, when one does something out of the ordinary in that direction, does not affect us at all. Many of our people have to make great sacrifices indeed to maintain a regular ministry within the Churches. Therefore, the problems that the right hon. Gentleman has mentioned, which have been brought to his attention by the representatives of our denominations, press on us very much and occasionally cause considerable hardship on the men who are called to the ministry.
One of the problems is that much depends sometimes on the view of the local Inland Revenue officer of the way in which certain expenses, which some of us regard as essential, should be treated, and whether they should be allowed for exemption from tax or not. There is this problem, also, that some of our ministers are regarded as self-employed and so cannot have the allowances which are made to certain other ministers who are regarded as being in the employment either of the Church as a whole to which they belong, or of a local cause. These difficulties could not be resolved by the acceptance of this new Clause.
848 I know from my own experience as an officer of my own denomination that there is a feeling generally among the churches that this matter should be dealt with on the wide lines indicated by the right hon. Gentleman. I am not as lacking in faith in him as is the hon. Member for Farnham (Mr. Nicholson), but, of course, he knows the right hon. Gentleman better than I do. I would assure the right hon. Gentleman that the speech he has made tonight, his wide outlook, and his generous recognition of the diverse problems which have to be solved, will be met with a spirit of equal co-operation by the various denominations, and I wish him and the representatives of the denominations every success in the negotiations which will be carried on during the coming year.
§ Mr. John Mackie (Galloway)
I am in complete agreement with my hon. Friend the Member for Farnham (Mr. Nicholson) about the clergy of the Church of England and Easter offerings, and also with what has been said by such a leading representative of one of the great Noncomformist bodies as the right hon. Gentleman the Member for South Shields (Mr. Ede), but I think it is only fair to point out that in this island of Great Britain there are two Established Churches, the Church of England and the Church of Scotland. One represents only 5 million people, but has 1 million communicants. The Church of England cannot claim any number of communicants, because it has no communion roll whatever. [An HON. MEMBER: "Rubbish."] It is not rubbish; let me tell my hon. Friend the Member for Kidderminster (Mr. Nabarro)—
§ Mr. Gerald Nabarro (Kidderminster)
I did not utter a word. I certainly did not say "rubbish". I hope that my hon. Friend will unreservedly withdraw the implication.
§ Mr. Mackie
I thought that my hon. Friend said "Rubbish".
§ Mr. Nabarro
It was not I, but an hon. Friend of mine behind me.
§ Mr. Mackie
Before this unlooked for intervention I was saying that in the Established Church of Scotland there is no provision whatever by way of Easter offerings, because the Church of Scotland up to now—one does not know what 849 may be the case in future, in view of present proposals—for its own good reasons and of its own choosing has not observed the churches' year.
I thought it only right to point that out because of the two Established Churches one certainly would not benefit by the new Clause or under the suggestions of the right hon. Gentleman the Member for South Shields. I thought it right that the position of the Church of Scotland, which represents a majority of the people, and possesses considerable privileges, should be pointed out.
§ Dr. Horace King (Southampton, Itchen)
I am sure that the hon. Member for Bodmin (Mr. D. Marshall), who moved the new Clause, like every other hon. Member of the Committee, will be pleased at the tone and character of the Chancellor's reply. I am glad that he has broadened the question. There is no doubt that the new Clause is certainly not broad enough. Many church folk make gifts to the clergy on other occasions. As my right hon. Friend the Member for South Shields (Mr. Ede) has pointed out, there are many denominations which make gifts to their clergy in other ways. I hope, therefore, that between now and next year the Chancellor will carry out his pledge.
I was particularly interested to hear that the right hon. Gentleman is to consult the various church folk about ways in which he can help them. The Committee behaves hypocritically, however, if it thinks that this is the answer to the clergys' problem. The real trouble is that we under-pay our clergy, that most of them are living on stipends, salaries or wages which are very little above their pre-war incomes, and that anything the Chancellor can do can merely improve their position ever so slightly. If the Committee means what it has been trying to say in debate, the solution is not merely a fiscal one and not merely a minor tax concession. The solution is for us to get back into our Churches and see that we no longer pay the clergy the low rates for the job that we pay them at present.
I hope that in his broader search the Chancellor will not neglect the principle underlying the new Clause, that is, that people who give freely out of affection and love do not want part of their gift to go to the Government. They want the 850 gift to be made to the person whom they wish to benefit. If, after years of faithful service, a man is given a gold watch, the Chancellor does not impose Income Tax on the presentation, much as he might like to do so. I hope that presentations made by people out of warm respect for their clergy will be free some day from tax.
§ Mr. D. Marshall
I should like to thank my right hon. Friend the Chancellor for what he has said and the spirit in which he said it. I believe that all right hon. and hon. Members present have faith in what my right hon. Friend has said and believe in his intention to try to do something in the course of the next year. I therefore beg to ask leave to withdraw the Motion.
§ Motion and Clause, by leave, withdrawn.
§ To report Progress and ask leave to sit again.—[Mr. P. Thorneycroft.]
§ Committee report Progress; to sit again Tomorrow.