§ The first two hundred and fifty pounds of a married woman's earned income shall be excluded from the computation of the total joint income for purposes of surtax.—[Brigadier Prior-Palmer.]
§ Brought up, and read the First time.
§ Brigadier O. L. Prior-Palmer (Worthing)
I beg to move, That the Clause be read a second time.
The history of this matter dates back to 1799, when at that time it was a convenient method of collecting taxes. It was also the time when married women had no personal rights at all and it was not the custom for women to go out to work. They were then, as they are still, classed for Income Tax or tax purposes with lunatics and imbeciles. I suggest that those days are long past and that this 824 attitude to married women for taxation purposes is archaic and out of date.
It is desirable, as has been said on both sides of the Committee, that in these days women, where possible, should be encouraged to go out to work. The Royal Commission on Taxation came down against the abolition of aggregation of income in so far as it affected Income Tax. I read that Report very carefully to find anything relating to Surtax. The only thing I could find, although it is not exactly in line with what I have to say, was the suggestion that in order to iron out the kink in the curve of tax liability which occurs where a man on reaching just over the Surtax level loses all his earned Income Tax relief, on earnings about that level and to assist married couples, both of whom are earning, the earned income allowance should be raised to figures at varying rates between £4,000 and £5,000. That is where the lower limit of Surtax and the upper earned income relief operate.
825 There is no doubt whatever that the Government, and particularly this Government, have been urging women to take up science and to train as scientists. As a result of the remarks that I made in the Budget debate, I was taken up on one point, as is often the case, by the Press when I said in passing and rather flippantly that this aggregation of income was encouraging people to live together and not get married. This got wide publicity, and I received letters from all over the country from married women of ability and qualifications who said that they were not working in order that they should not aggregate their income so that it came into the Surtax group.
One case was of a woman scientist, who had very high honours degrees in science, whose greatest joy in life was experimenting and working in scientific laboratories, and who now that she is married is not permitted by her husband to carry on with her work. I consider this a very serious state of affairs. I do not lay very great stress on the other aspect of this in which people say that because of the high taxation on those in that particular income bracket there is a great deal of emigration, but I say that it is discouraging these able women who are capable of earning high incomes from so doing, and that is all to the bad.
I do not suggest that any very large concession should be made. I am not suggesting that we should go so far as recommended in the Royal Commission's Report, but I do suggest that, as it is at the moment, where very large concessions are given to the lower income groups in order to encourage women to go out to work, similar treatment should be given to those in the higher income groups as well.
§ Mr. Houghton
We could not support the proposed new Clause. The hon. and gallant Member for Worthing (Brigadier Prior-Palmer) has gone back in history to the time when married women had no rights at all; but our taxation system has for some time recognised the special position of married women's earnings.
There may be an argument whether married women's earnings are favourably or unfavourably treated for Income Tax purposes. The hon. and gallant Gentleman referred to that portion of the Second Report of the Radcliffe Commission on Taxation, which discussed some 826 of the features of the present system and the exemptions and anomalies that some people allege exist between the taxation of married couples where the wife is earning, and the taxation of married couples where the wife has to stay at home and look after the children.
The proposed new Clause relates to Surtax and not to Income Tax. There may be a case for an adjustment of taxation on married women's earnings, but we should not think of beginning at the Surtax level. Examination of this problem should take place as a whole and not be confined to the Chancellor's very liberal concessions to Surtax payers in the Bill. I suppose that the hon. and gallant Gentleman could have raised this matter on Clause 12, which deals withAllowance of personal reliefs for purposes of Surtax.As the hon. and gallant Gentleman knows, the Chancellor is, for the first time, allowing in this Bill personal reliefs over a certain minimum sum to be set off against Surtax liability. A married man, for example, now has an exemption limit of £2,100 as against £2,000 previously. I do not think the Committee would wish to support a new Clause which would exclude the first £250 of a married woman's income for Surtax purposes.
It may be time that we looked at the whole question of taxation of married persons. There is a lot of loose talk about its paying people better to live in sin than to get married, but I do not think that people order their lives in intimate matters of that kind solely by reference to the advantages or disadvantages of taxation. Most women would, I think, wish to feel the security of marriage rather than that a concession might be obtained through Income Tax or Surtax arrangements.
It will be no surprise to the hon. and gallant Gentleman or to the Minister that we think that Surtax reliefs have gone far enongh in the Bill, for the time being at least. In those circumstances, we shall not be able to lend the hon. and gallant Gentleman any support.
§ Mrs. Lena Jeger (Holborn and St. Pancras, South)
I oppose the proposed new Clause, for reasons not exactly those which have motivated my hon. Friend the Member for Sowerby (Mr. Houghton). 827 My main reason is that the proposal does not go far enough.
We have to consider the whole principle on which married women's earnings are taxed. The only way to put the matter right is for us to start with the basic flaw in our Income Tax law "that a woman's income shall be deemed to be that of her husband." That is the basic injustice which must be put right, and anything which is short of that is a waste of time.
The need is not for this new Clause, but for a Clause which will alter the law and abolish the principle of aggregation altogether. Where a husband and wife are both working, there is no reason why there should be a weighted allowance for the man. The only sensible way to deal with the question, when the husband and wife are both working, is for each to be assessed separately throughout their whole income and for the point never to be reached, as it is reached at present, where aggregation takes effect.
To give an example of the confusion which exists in the taxation of married couples I should like to refer to a Question which I asked on 15th March, 1955, and which is reported to column 109 of the OFFICIAL REPORT. It reveals that where a wife earns £900 and her husband earns £450, making a total of £1,350, the Income Tax payable is £206; but where the man earns £900 and the woman earns £450, giving the same total of £1,350, the tax is £188.
I cannot see why there should be this difference in the amount of tax paid on identical joint incomes. Nor can I see why the husband and wife should necessarily be regarded as a single tax unit. In France, there is a system by which the whole family income is aggregated and then divided. Why should a husband and wife be automatically considered as a single tax unit, and not two brothers or two sisters who happen to live together, or two other people living together in the circumstances referred to by the hon. and gallant Member for Worthing (Brigadier Prior-Palmer)? We are completely out of date in this respect and need a fresh approach to the whole problem.
Another reason why I hope the Committee will in future look into the present system is that it seems to me to be an overhang from the days when the position of women was even more inferior than 828 it is today. It makes a mockery of the battle for equal pay, to which both sides have paid lip service, if, after the principle of equal pay has been accepted and has been put into practice, the Chancellor of the Exchequer does his best, through an out of date and discriminatory tax system, to see that that equality of pay is completely undermined in the case of a married woman by the system of aggregation for tax purposes.
It may seem unusual for a member of the Labour Party to be bothered about the incomes of Surtax payers, especially when we have a Chancellor of the Exchequer who looks after them so tenderly. Indeed, that is not my reason for raising this matter tonight. I raise it because it seems to me a basic part of the social injustice to women who are working, often extremely hard.
There are good precedents in other parts of the Commonwealth for a change in the law. In Canada and Australia, there is no aggregation; there is a single tax assessment for married women. In the United States, there is a system which gives a woman at least a choice of a separate assessment, although I do not want to go into too many of the complications tonight. The Royal Commission's Report, to which both the hon. and gallant Member and my hon. Friend the Member for Sowerby referred, is extremely unconvincing in the way in which it deals with this subject. In the first place, the Commission refused to receive any oral evidence on the question of married women's earnings.
The Commission came to the following conclusion, in paragraph 131 of its Second ReportWe have come to the conclusion that we ought not to recommend the abandonment of the present system, because we think that some of the arguments that support it are too strong not to be acceded to.That really is a most confused and feeble recommendation to have been made, to say nothing of what Sir Ernest Gowers must think of the deplorable English.
What sort of people are concerned in this question? There are 80,000 working wives in this country who are today paying Surtax on the whole of their income. The Chancellor of the Exchequer has told us that it would cost about £41½ million to abolish the system of aggregation 829 which brings this about. Among those 80,000 women there are many highly trained, skilled professional workers whose services are desperately needed by the community.
I was interested to hear the hon. and gallant Member for Worthing refer to some of the correspondence he has received. I should like to mention a letter which came to me, after our last debate on the subject, from a distinguished woman doctor, who holds a doctorate of medicine and who is one of the few women to be a Fellow of the Royal College of Surgeons. She is married to a doctor, and in her letter she says:I work full time in a hard and responsible job, virtually for a few hundred pounds a year. I could, of course, give up work. The fact that I am working not only involves an enormous taxation burden but makes the running of our doctor's house—at no time an easy matter—even more difficult and expensive.The case of doctors is one to which the Committee should be particularly sympathetic, and this point of view is supported by the Medical Women's Association.
One can take the matter further. If a doctor marries a nurse, as often happens, and quite rightly, and if that doctor is a busy practitioner with a full list, and then, just to meet some emergency or shortage of staff in a local hospital, his wife goes back to work for a few weeks, she, as a nurse, will be paying Surtax on the whole of her income. I cannot think that it was ever the intention of those who framed our tax laws that women who are doing a good, professional job should be penalised in this way.
We must all know of cases of people who are not by any means wealthy, but who, by virtue of long training and the responsibility of their posts, are earning salaries which bring them within the Surtax level, as taxation is arranged at present. I know of a doctor who is married to a headmaster, and of a psychiatric social worker who is married to a physicist, who find themselves having to pay Surtax on the whole of their incomes.
It is in the field of social services that we are very short of workers, and this discouragement is, I submit to the Committee, most deleterious. In many of the 830 professions, such as nursing and social work, there is not a shortage of entrants but a tremendous loss through marriage, and this, I am sure, could be partly offset if there were a fairer tax basis.
For those reasons, I regret that the new Clause is not one which I could feel able to support. I am opposing it because it does nothing to right the basic principle of discrimination against the income of a married woman, which I feel must be the starting point of any reform in this direction.
§ Brigadier Prior-Palmer
The reason that I did not embrace the whole Income tax group arose from an Answer to a Question posed by the hon. Lady the Member for Flint. East (Mrs. White) to the Chancellor this year, when she asked how much it would cost to do that. The reply was that both parties to the marriage would lose by it and the Exchequer would gain £75 million. That is why I did not bring it down to Income Tax; they would lose so much by it that it would not pay them.
§ Mrs. Jeger
In column 176 of the OFFICIAL REPORT for 16th April this year, the Chancellor of the Exchequer is reported as informing me that the abolition of aggregation would cost £4½ million if applied to the earnings of married women.
§ Sir Charles Mott-Radclyffe (Windsor)
I do not often agree with what the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. L. Jeger) says, but this evening there is a great deal of force in her argument. She has really hit the nail on the head. If we wish to encourage women to embark upon the teaching profession, the medical profession and various branches of science and to earn the high salaries which they can command in those professions, it seems absurd that once a woman gets married somebody earning a high salary in another profession should attract a double rate of tax. That is an absurd disincentive.
The hon. Lady put the argument very well. She said that the new Clause does not go far enough, and I agree with her. On the basis, however, that a half a loaf is better than no bread, I hope that my right hon. Friend the Chancellor of the Exchequer will go at least some way and meet us by accepting the principle of the new Clause.
§ Miss Jennie Lee (Cannock)
I hope that before we have another Budget we shall have a Chancellor of the Exchequer who really examines the fundamentals behind the principle that we are discussing. We are taking it very lightly tonight. The right hon. Gentleman cannot expect to get us on this side seriously excited with the limited issue of Surtax which has been raised. We must, however, remember that many thousands of young women are being trained in our universities, most of them at public expense.
When the Chancellor is calculating how much he will gain or lose, he must also consider that every inducement should be given to the trained professional woman who wishes to do so to go on doing the job which she has been trained to do.
We on this side do not like the kind of situation in which a married woman, particularly with young children, is forced out to work through sheer economic necessity. We believe that a good society is one which gives the maximum diversity in the way we live, that there should be no dictation and, particularly, that the modern woman should not be sermonised and dictated to. It is for her to decide and for her husband and family with her to determine what is a good life for them. It should be remembered that if a woman who goes out to work is keeping a fair standard of home or has children, she has very often to pay to maintain the standard of the home by engaging, if not whole-time, part-time services of somebody to help her.
While I cannot support the new Clause in its entirety, I hope that before we have another Budget we shall examine the basic principle of aggregation and recognise that in the modern world a woman should have the choice of whether she goes out to work and that it is her private concern and not a State matter, but that it is a State matter to ensure that taxation is not weighted in such a way that we discourage women who have been expensively trained, often at public expense, from continuing to work after they marry.
§ The Economic Secretary to the Treasury (Mr. Nigel Birch)
Both my hon. and gallant Friend the Member for Worthing (Brigadier Prior-Palmer) and 832 the two hon. Ladies—the hon. Member for Holborn and St. Pancras, South (Mrs. L. Jeger) and the hon. Member for Cannock (Miss Lee)—have put the case persuasively, and I should like to answer it. This concession would cost £3¼ million, which is of course an item, but is not in itself a complete answer to the proposal. There are, however, two slightly different points arising from the speeches which have been made.
There is, first, the argument concerning aggregation and whether the income of the husband and wife should be aggregated; and secondly, the question whether the wife's earnings should to any extent rank as a relief against Surtax. As my hon. and gallant Friend the Member for Worthing quite rightly said, this has been in our tax law since 1799—a quite respectable precedent; but there have been too slight dints in it in recent years which are worth recording. There was the special wife's earned income relief of seven-ninths up to £140, and married women's earnings are charged for Income Tax at reduced rates. So there has been very slight dents in that principle. Those dents do not make any difference in Surtax.
The Royal Commission, considering this matter, thought that those slight dents in that principle, if the wife was earning, favoured the married couple too much compared with the couple of whom only the man was earning. The Royal Commission took the view that it was rather too much.
Those who pay Surtax, of both sexes, obviously do not like aggregation very much because it costs a great deal more in tax. The two hon. Ladies and my hon. and gallant Friend said it was a terrible thing that a wife should pay Surtax on the whole of her income. However, unless a couple apply to be assessed separately, it is the husband who is responsible for paying Surtax. I would here say a word for oppressed husbands, for we have heard a great deal about oppressed wives. Experience as I have heard of it shows that wives in general take the view that they do not hold with Surtax, and that a wife will spend whatever net income she gets, and it is the husband who is responsible for paying the Surtax.
I thought many of the arguments were really directed to the view that Surtax is too high anyway, and that it 833 discourages both the married woman and her husband from working, rather than arguments against aggregation in itself. The Royal Commission considered this question of aggregation and reported on it at very considerable length in paragraphs 113 to 121 of its Report. It received a very large number of representations on the subject. After carefully considering the matter, it came down in the end in favour of maintaining the principle of aggregation.
It did that for two main reasons. There was a lot of minor reasons, but there were two main reasons. One was that it was extremely expensive in Surtax—it is only in the Surtax range that it becomes expensive—and that if it was expensive some other tax would have to be raised instead. The second was that it was fairer to do it in this way because this principle of separate assessment would make loopholes for evasion. What happens in America, I believe, is that the incomes of a wife and of a husband tend, curiously enough, to be exactly the same, and that, of course, has the very fortunate effect of reducing liability to taxation. That, of course, is what is bound to happen if we abolish the principle of aggregation. Ii means a decrease in Surtax paid, and in so far as there is less tax revenue from Surtax we may have to get it out of something else.
My hon. and gallant Friend was quite right in saying that the Royal Commission made a qualified suggestion under which a wife's earnings would have been of some benefit in Surtax relief, but under the provisions of this Budget a married couple are considerably better off than they would have been under the suggestion of the Royal Commission. In addition—and this is important—as my hon. and gallant Friend will remember, the excess of the married man's personal allowance over the single man's personal allowance is also allowed to run for Surtax, and that is assessed against the joint income of husband and wife.
So I would say that while anyone who is a Surtax payer must have great sympathy with the idea that aggregation is a very unpleasant business, and that although we all want to encourage women to take their full part, particularly in professional life, we believe that the Chancellor has gone as far in this Budget as 834 circumstances permit him to go. The future is open and we hope that other things, other reliefs, and other benefits may happen, but I would point out to my hon. and gallant Friend that my right hon. Friend at this moment cannot go any further. Therefore, I would ask him to withdraw the Motion.
§ 10.15 p.m.
§ Mr. Harold Wilson (Huyton)
I will not detain the Committee by arguing the merits of either this narrow new Clause or of the wider Amendment which is not on the Order Paper for reasons we all know, but which has excited the interest of two of my hon. Friends. I think that most of us would agree that, being confined to Surtax, this proposal makes a most unsatisfactory way of approaching the problem. I find myself in agreement with my hon. Friend the Member for Sowerby (Mr. Houghton) on the broader issue and, of course, the whole subject has been considered at very considerable length by the Royal Commission, as the Economic Secretary has reminded the Committee.
I was not sure whether, in his concluding words, appealing for withdrawal of the Motion, the Economic Secretary meant that if the Chancellor in a subsequent year, if he is still in office, felt able to give more tax reliefs this would be considered by him. We thought that the present Government were in agreement with the Royal Commission. However, I join with the right hon. Gentleman in suggesting that the Committee should not be pressed into coming to a final decision on this very broad subject tonight, particularly since the debate is on this narrow new Clause.
I join in that suggestion all the more—and this is a very pertinent reason, indeed —because this debate on the whole question of the taxation of earnings of married women is being carried out without the assistance of any hon. Lady opposite. Until the hon. Lady the Member for Devonport (Miss Vickers) came in at a very late stage, this debate on the taxation of married women has been carried on entirely without a single hon. Lady of the Conservative Party being present. What conclusion the women voters in the country will draw from that fact I can only leave—
§ Sir Henry Studholme (Tavistock)
May I point out that my hon. Friend the Member for Hornsey (Lady Gammans) has been here all the time?
§ The Temporary Chairman (Sir Norman Hulbert)
The hon. Lady the Member for Hornsey (Lady Garmnans) is not within the Committee.
§ Mr. Wilson
I thought it worth while to mention the point, because I thought that, tied up with the argument put for- ward by the Economic Secretary, it might weigh with the hon. and gallant Member for Worthing (Brigadier Prior-Palmer) in either withdrawing or pressing his Motion.
§ Brigadier Prior-Palmer
I believe that this is the first time that this subject has been raised in a debate on the Finance Bill and I thought it high time that it received an airing. I shall certainly return to the question in the future and I hope that we shall be able to make a further dent in the tax law on this subject, whether on the basis pleaded by the hon. Lady the Member for Holborn and St. Pancras, South (Mrs. L. Jeger) or on mine. I explained why I confined the matter to a narrow point. It was because I thought that by doing so we should get a very small foot in the door in relation to the principle.
However, in view of the explanation given by my right hon. Friend the Economic Secretary, I beg to ask leave to withdraw the Motion.
§ Motion and Clause, by leave, withdrawn.