HC Deb 16 July 1957 vol 573 cc1007-23

Compensation for loss of life, or for injury to body or health, or for loss of profession, trade or managerial position, or dismissal from employment, or for loss of pension rights, paid out of German public funds under the laws of the Federal Republic or the Länder (States) of the Federal Republic of Germany to victims of National Socialist persecution shall be excluded from the compensation of income for the purposes of the enactments relating to income tax and surtax in any year in which such compensation has been or is so paid and any assessments made as regards sums so received in compensation shall be revised accordingly and repayment of any tax paid in respect thereof shall be effected or allowed for in any subsequent assessment.—[Mr. J. Foster.]

Brought up, and read the First time.

Mr. John Foster (Northwich)

I beg to move, That the Clause be read a Second time.

The object of this Clause is to exempt from taxation in the United Kingdom certain payments which are made by the German Government to victims of Nazi oppression. I could make a rather lawyer-like list of the various forms of compensation paid by the German Government, but that might bore the House.

The position, in layman's language, is that the German Government have decided to make compensation, inadequate though it must be, to victims of Nazi persecution and, as the compensation is in the nature of an extraordinary payment and from that point of view does not have the aspect of an income payment, the German Government, quite properly, have decided that these payments should not be subject to German Income Tax. The British Government, on the other hand, decided that these payments—and I am speaking about the whole category—should be liable to United Kingdom Income Tax.

The result is that the British Government are getting the advantage of the remission of German Income Tax. This means that, at the expense of the German taxpayer and of the victim, the British Government are receiving an extra amount of tax, namely, the tax which the German Government remitted to the victim. I submit that this is unfair, and the object of the Clause is to try to remedy the injustice. It is unnecessary to stress to the House the peculiar nature of these payments. They do not partake, from a commonsense point of view, of the nature of payments of income at all. Technically, they come under United Kingdom Income Tax law because they are paid at intervals.

It may be found that certain categories may yet be exempt. It would be interesting to know from the Financial Secretary that that is the case, but that does not affect the principle which, I should have thought, must be that on moral grounds the United Kingdom Government are not justified in levying tax on compensation paid to these unfortunate victims. This moral argument finds favour with the Governments of the United States, Sweden and Holland. In all those countries legislation has been passed on the lines o f this Clause, because they feel that it is not right for their Government to take advantage of a remission of this tax made by the German Government and put it in their own pockets.

6.15 p.m.

That is the short point. It is surrounded by a number of technicalities. It would be possible, perhaps, to distinguish one payment from another, but it is better to leave the House with the broad point of principle. It is a moral point, and we have found in our history that our Governments have not been insensitive to moral points of view. I am prepared to concede that technically these payments are liable to United Kingdom Income Tax, but I submit that when compensation is paid to somebody who may have lost his nearest relatives in some concentration camp, or to somebody who has serious bodily injury or has lost his self-employment or employment through Nazi outrages, it is entirely morally wrong for Her Majesty's Government to levy a tax which is increased by the amount that the German Government have remitted to the victim.

There is one technical point that I want to bring to the notice of the House. It has been said, in correspondence, by the Inland Revenue that it would be difficult to do what the Clause proposes without creating a precedent. Other Governments have found it possible to do it without creating a precedent. It is also suggested that this is rather like a widow's pension, but in my submission it has no relation to that at all. The Inland Revenue argues that if we exempt from tax this payment of compensation we should be creating a precedent for letting off widows' pensions in this country, or we should be creating anomalies between these payments and widows' pensions in the United Kingdom.

There are several answers to that. First, the German Government have calculated these payments on the footing that Income Tax would not be paid, and yet the United Kingdom Government come along and take 8s. 6d. in the £. Widows' pensions in this country have an earned-income relief allowance, but I understand that the Inland Revenue here denies this relief to these periodical payments. If that is so, it shows that the payments are of a different kind.

I submit that there is an important moral point in the Clause, and I ask the Financial Secretary to look at it. He need not accept the Clause. It would be quite easy for him to do by administrative concession what the Clause proposes. It is not necessary for the Clause to be passed by the House, but it is an indication to my hon. Friend that he should recognise the strength of the moral principle underlying it.

Sir Thomas Moore (Ayr)

I beg to second the Motion.

Mr. J. Grimond (Orkney and Shetland)

I want to say a few words in support of what has been said by the hon. and learned Gentleman the Member for Northwich (Mr. J. Foster). I have no doubt that the sympathy of the Treasury will be entirely with the victims of Nazi oppression whom this proposed Clause is designed to help. I have also no doubt that the Treasury has interpreted the existing Clause strictly, and correctly, because if there is any change in Treasury practice it must come from this House and nowhere else.

I urge upon the Minister that there seems to be, at least prima facie, a strong case for making an exception to the general rule for these unfortunate people. As the mover of the Motion has said, it is a curious definition of income when it includes compensation of this kind which I rather think, although it is paid periodically, will not last for very long. Although it is not the business of the Treasury to decide how this money was earned, there seems to be a strong case for compassion in this instance.

There also seems to be a compassionate argument in favour of a definite and restricted class. No doubt the tax argument against it will be that it would create a precedent and that it would be difficult to know where the process should stop. The possibility of extension to widows has been mentioned. Yet if the precedent is morally extended to people in a like position, that is to say, to refugees and people to whom compensation is being paid, I cannot see that it will be anything but a good precedent.

I sometimes think that we are over-nervous of precedents on the ground that all precedents are necessarily bad. I cannot believe that there will be a large leakage from the Treasury if this precedent is extended even to all people who could claim to be in a similar position, that is to say, that they were in receipt of payments by way of compensation for harm or loss caused to them by oppression. An additional argument is that they have been relieved of tax liability by the Government which is making the payments.

I do not think that there is much purpose in going into the technical details of the matter. No doubt these have been studied by the Treasury, which is well versed in the law as it stands. However, I make my plea to the Minister that there seems here to be a case for the exception of a narrow class of deserving people, and the plea is greatly strengthened by the fact that other countries have found it possible to relieve these people of taxation and so has enabled them to receive their payments in full.

Mr. Sydney Silverman (Nelson and Colne)

I will not detain the House long in speaking in support of the Clause. My point arises out of the suggestion that in some way, if the Government were to do what is asked of them, they might be creating a precedent. I confess that I do not quite follow the meaning of that argument.

We are dealing here with the handful of survivors of a unique historical event. I do not think there has been at any other time in world history such a mass crime as was committed in Germany in the circumstances which are referred to in this proposed Clause. It is not, one would suppose, a matter which would ever be repeated, and if it is not a matter which will be repeated, then I suppose there is little ground for fearing that there will ever be any other class of persons on whose behalf the same claim can be made by relying on this category as a precedent.

Indeed, one of the few—and I say "few" advisedly—bright things in the post-war world is that the German people have brought themselves to admit guilt in this matter. Although there can be no real reparation, having regard to the nature of the crime, at any rate it would be something to agree to pay to those who survive a slight measure of compensation, but they have gone rather beyond that. They have paid quite large sums of reparation which the State of Israel has been able to use for constructive purposes.

If anything could serve to lessen the human guilt involved in the original events, it is the fact that the German people, or a great many of them—one likes to think a majority—look with shame upon their record in this matter and are prepared to do something to make good some part of the material loss to those who survive.

In those circumstances it seems a little, shall we say, out of the national character for this country to levy a revenue tax upon compensation of that kind. It is not like us to do it. In the old days, when all our passions ran so high about the German nation, one would have said then—although I think it would not have been true—that it was completely outside the German character that they could be brought to admit guilt and pay some kind of reparation. But if, in those days, we had imagined such a possibility, who would have imagined that a British Government, when that came to pass, would have thought that they were entitled, or morally justified, in having some kind of rake-off in this way? I hate to use the word "rake-off," but ugly words sometimes bring out a point more clearly.

It is difficult to say how these payments could even technically be regarded as income, but, like other hon. Members, I do not want to go into the technical aspects. It is certainly not property which produces income. It is certainly not a gainful occupation or the reward of one. No one goes in for being a refugee of this kind in order that people earn the kind of reward for it that is being paid. So I am not certain on what technical basis it is held that this is income in that sense.

But let us suppose that it is income. Let us suppose that all the law and all the technicalities and all the legal arguments entitle us to charge it with tax. I think that we would say to the Government, "Nevertheless, do not charge it, since the United States, Sweden, Holland and Germany have agreed not to do so. Poverty stricken as we no doubt are, in spite of our need for revenue, we do not really need to take it in this way." I hope, therefore, that the hon. Gentleman will be able to say, whether he accepts the Clause or not, that a charge of this kind will not be made.

6.30 p.m.

Mr. Powell

It is impossible to approach the subject matter of the new Clause without emotion and without evoking associations which, in our different ways, we all have in our minds; but in considering the Clause I must ask the House not to take counsel of emotion too far but to look dispassionately not only at what is proposed, but at its wider bearings.

The new Clause would deal with four classes of case. It deals, first, with periodical payments to persons who have suffered injury to body or health. I can deal with that straight away, because I can tell the House that those annuities do not attract Income Tax. The new Clause then deals with compensation for loss of life, that is to say, annuities paid to the relatives—in the majority of cases, I suppose, to the widows—of those who lost their lives in Germany. It deals, thirdly, with those in receipt of annuities for loss of position or dismissal from employment and, finally, with annuities for loss of pension rights.

I will take the last of those three remaining types of case first, annuities which are for loss of pension rights. It is evident that since those are in substitution for a pension, the nature of such payments must be of the nature of a pension and subject to tax in the same way as a normal pension. I add, however, that this class of case has not actually been referred to the Inland Revenue and that, therefore, is a provisional view. Of course, particular circumstances will be investigated to ascertain whether such payments do fall to be treated as equivalent to a pension.

Sir Hugh Lucas-Tooth (Hendon, South)

Is my hon. Friend dealing with the case of those losing public pensions?

Mr. Powell

I am dealing with the fourth of the cases covered in the new Clause, annuity payments specifically for loss of pension rights. I was not dealing with, and I am now coming to, annuity payments which are for compensation for loss of husband or relative, or compensation for loss of a position or employment. It is extremely difficult, indeed I put it to the House that it is impossible, to distinguish the situation of the widow of a victim of German persecution from that of a British war widow whose husband was killed in the war against Germany and perhaps done to death in a German prison. Whatever the emotions and prejudices with which we all approach the subject matter of the new Clause, we cannot imagine that it could be right to put those widows' pensions—and they will be mostly widows' annuity payments—in a different and preferential position compared with the payments to war widows. Under our law—and that is not under discussion at the moment—war widows' pensions are treated, as are other widows' pensions, as a form of income. It would be impracticable, unjust and would, sooner or later, and probably sooner, arouse serious ill-feeling if we were to give this privilege to the annuity payments which are compensation for loss of life.

Finally, there are annuity payments for loss of position or dismissal from employment. I have made careful inquiries into the treatment of similar payments which are made in other circumstances where a person loses his employment or is dismissed prematurely and is compensated for it by annuity. I am assured that in those cases there is no doubt that it would be treated as taxable income. There again the difficulty arises of distinguishing between a German, perhaps a Jewish, professor who lost his chair in the 1930s and who, as an elderly man, is now receiving annual compensation, and an Englishman who lost his employment, perhaps under very unfortunate circumstances, and who, in consequence, is in receipt of an annuity.

Mr. S. Silverman

Does it not make some slight difference—it may not be conclusive—that the compensation for the people the subject of this Clause was calculated or assessed on the assumption that tax would not be paid?

Mr. Powell

I am coming to that. The underlying principle here is that there must be parity of treatment for similar income received by those who are liable to tax in this country.

We cannot make a distinction between one kind of income and another, either on the basis of the circumstances in which that income arose, or—and now I come to the point of which the hon. Member for Nelson and Colne (Mr. S. Silverman) reminded me—the tax treatment of that income in the foreign country in which it arises. It would he impracticable for us to treat incomes received and enjoyed by British taxpayers differently according to the tax law of the country in which they originated, even where, as here, those tax laws have been deliberately and for political and possibly moral purposes framed in a special way.

We cannot be guided by supposed analogies with the treatment of these payments by other countries. For example, I understand that the United States treats them as not liable to tax, but the United States, also under its law, treats war widows' pensions as not liable to tax.

The House will see that the only practicable course is for us to maintain consistency in our own tax code and treat within that code similar income in a similar way, irrespective of the original circumstances and irrespective of foreign tax. I therefore ask the House not to make this alteration in the law. At the same time, I say that every type of annuity payable by the German Government will be carefully investigated by the Inland Revenue and by Her Majesty's Government to ensure that it is treated fairly and on all fours with comparable income arising in this country.

Mr. Douglas Houghton (Sowerby)

I am sure that hon. Members on both sides of the House will sympathise with the Financial Secretary for having had to give an explanation of this Clause, an explanation which I am sure came unpalatably to him. We all listened to the persuasive arguments of the hon. and learned Member for Northwich (Mr. J. Foster), and noticed the response of the House to what he said.

This is a matter which is bound to excite our sympathy and our compassion with victims of Nazi persecution and cruelty. Many endured horrible sufferings and suffered grievous losses. We wish that we could exempt money compensation for their sufferings and losses from United Kingdom Income Tax. At the same time, I think that the Financial Secretary has done his duty in warning the House that we should probably be treading a very difficult path if we were to follow the course proposed in the Clause. The hon. Gentleman has already given us the example of a soldier in the British Army, shot in cold blood by his captors, whose widow receives a pension which is taxable. It may be that some of the forms of compensation coming within the scope of the new Clause would be little more than money compensation for dismissal and deportation from the country concerned before the war started, or on behalf of a professor or other person who just managed to escape from potential danger and was dismissed or sentenced to some punishment in his absence. All these difficult types of case might come within the scope of the Clause.

I think that the hon. and learned Member for Northwich was advocating a most dangerous doctrine if he wanted the House to accept a comprehensive administrative concession upon matters of tax liability. We cannot concede to the Commissioners of Inland Revenue too much discretion in the levying of taxes imposed by this House. They are entrusted by Letters Patent with the care and management of the Income Tax Acts, and they must discharge that duty fairly and fearlessly. The degree of discretion left in their hands to ease the tax burden on the citizen is necessarily narrow.

Mr. J. Foster

I would ask the hon. Member two questions. First, did he approve of the extra-statutory concession given during the war to refugees, exempting them from tax in respect of foreign-owned securities? Secondly, does he think it right that these claims for periodical payments for loss of life should not have the benefit of an earned income concession while widows' pensions in England do?

Mr. Houghton

There may be some anomalies in the methods of taxing various payments which are made. Some anomalies may be merely reflections of the same sort of thing that exists in our own internal tax arrangements. If there are any which need remedying the House can attend to them. But I am sure that we have realised in the past that one concession, very often justified in isolation, swiftly creates a sense of injustice when a further comparable and equally deserving concession is asked for and difficulties are found in extending the scope of what has been done on previous occasions.

We also have to consider whether it would be proper to grant this concession not to the victims of persecution generally, but to the victims of a particular form of persecution, namely Nazi persecution. No doubt there are some payments coming from Japan at present which might equally be brought within the scope of the Clause.

Mr. S. Silverman

I think that I am right in saying that the agreed compensation paid by the Japanese and distributed here was regarded as a payment not subject to Income Tax.

Mr. Powell

Of course, it is not paid as an annuity.

Mr. Houghton

There are other payments being made by Japan apart from the distribution from Japanese blocked assets, which were the subject of an agreement between the British and Japanese Governments. But we have to consider the position of those who suffer here from negligence on the roads, and injury and death sustained at work. Many difficulties of that kind are bound to arise in taxation law.

Mr. Silverman

I really cannot see the force of this part of my hon. Friend's argument. I have never heard that compensation paid for damages in a road accident is subject to Income Tax.

6.45 p.m.

Mr. Houghton

My hon. Friend may remember that on 6th January, 1956, there was a very important case in the House of Lords — the British Transport Commission v. Gourley—where consideration was given to the question whether a lump sum payment for loss of earnings should be written down—

Mr. Silverman

No, no, no.

Mr. Houghton

My hon. Friend says, "No, no, no." I wish that he would allow me to complete what I am saying. The House of Lords decided that a lump sum payment by way of compensation for loss of earnings could be written down by the court to take account of the taxation which would have been borne on those earnings had they been received. That was the point at issue in that case.

Mr. Silverman

What has that to do with this case?

Mr. Houghton

My hon. Friend asks what it has to do with this case. It has this to do with it—that payments which represent annual payments and which are income in the hands of the recipients are, generally speaking, taxable according to our tax law. Certain forms of lump sum compensation, while not taxable, may be modified in amount on account of the indirect relief from tax which would otherwise be given.

I do not rely solely upon those illustrations, by any means, for bringing to the notice of the House the obvious difficulties which the Clause would create in all sorts of directions. We cannot ignore the fact that persons who receive different forms of compensation for injury and death in this country pay tax according to the law, and there seems to be no real justification for treating similar payments made by Germany differently from those made by employers or other persons responsible for paying compensation for injuries inflicted to citizens at home.

At all events, I think that the House will agree that the difficulties confronting the Legislature in giving this type of special exemption are formidable indeed, and would carry us much further than we realise at the moment. The full extent to which they would carry us would be appreciated only if we followed the course of the concession right through our taxation system, and considered its effect upon payments very similar to these, or even identical in kind, but made from other sources and in different circumstances. I could not advise my right hon. and hon. Friends to press the Minister to accept the Clause, or to invite the House to divide in favour of it.

Sir H. Lucas-Tooth

I do not in any way quarrel with the principles which have just been enunciated by the hon. Member for Sowerby (Mr. Houghton), but I do not think that they are altogether applicable in this case. He cited a decision of our courts that payment by way of damages could be reduced in respect of Income Tax. We have no knowledge of the extent to which this payment may have been reduced by the German Government in consideration of German Income Tax law, and that alone stultifies the hon. Member's argument in this case.

I have had considerable correspondence with my hon. Friend the Financial Secretary about a very closely analogous case concerning the pensions payable by the German Government to ex-German public servants. He will remember that we had a very considerable and extended correspondence in this matter, and that he finally wrote to me a letter which I accepted.

I should like to read an extract from that letter, as I think that it has a bearing on the principle in this case: … I promised to ascertain the basis of payment of these pensions, as we both agreed that this should make the question of taxability fairly clear one way or the other. In other words, it was not the fact of being a pension that was important, it was the basis on which that pension is assessed. … If the official is not offered, or does not wish to accept, reinstatement—and this must include all the persons at present living in the United Kingdom—he is given until he reaches normal retiring age a 'pension' equal in amount to the emoluments he would have received on reinstatement; after he reaches retiring age he is given the normal pension based on those emoluments. If the official was over the retiring age, or was incapable of working, before the Law came into force, he is entitled to receive the pension he would have had if he had remained in employment … In that case, pensions were normally assessed on the basis that they were pensions in the normal sense of the word; something equivalent as a pension to what they were replacing and which were intended, so far as I know, to be payable throughout the lives of the recipients. It seems to me that the present case is different. Here the payments are not, as I understand, necessarily based on any conception of being equivalent to the amount that they are replacing. Indeed, the German Government have drawn the distinction that whereas the pensions given to former public servants, the ones which I have been discussing with my hon. Friend, are taxable in Germany, the German Government have freed from tax the payments we are now considering. So there is a distinction made in the basis of those payments on the part of the payers, the German Government.

I should imagine that if we examined these pensions carefully, we should find that they were much more in the nature of damages payable over a period of time and, indeed, I believe I am right in saying that in some cases, if not in all, there is an actual total limit of the amount so payable. I understand that in some cases there is a limit of 25.000 Reichmarks. If that be so, clearly these payments must contain something in the nature of a capital element which should not be wholly assessed for Income Tax purposes. I do not wish to go into the technicalities of this matter, but my hon. Friend has given a somewhat technical answer, and I thought it fair to say that there is some technical argument the other way.

I would not press the House to accept this Clause, because I think it may well be that the objections against the wording of this Clause advanced by my hon. Friend and by the hon. Member for Sowerby are sound. I do not think that my hon. Friend would disagree with that. He opened his remarks by saying that probably what is necessary to be done is to reconsider all this matter in the Treasury. I ask my hon. Friend to reconsider it in the light of the remarks which have been made today. If, by other means than legislation, he can bring about some of the results we wish, that would certainly benefit a number of hard and deserving cases

Mr. Austen Albu (Edmonton)

With his usual clarity, my hon. Friend the Member for Sowerby (Mr. Houghton) has put the difficulties which arise in making discrimination in taxation as between individuals. The Financial Secretary, naturally, has put forward difficulties from his point of view. He asked us to discuss this matter without emotion. That is not an easy thing to do for those people who may have relations or friends—as have most of us who happen to be of the Jewish race—who have suffered in this way. The only reason that I intervene in this discussion is to ask the Financial Secretary to look again at some of the arguments advanced by the hon. Member for Hendon, South (Sir H. Lucas-Tooth).

If it be the fact that these sums, call them pensions or what you will, are not the full sums which would have been paid for pension or compensation had they been subject to tax in the country of origin, in Germany, then it seems to me that they could well be looked at in a different way when they are received in this country. Because if they were the full sum which would normally be subject to tax, the arguments advanced from both Front Benches may well apply. But I understand that that is not the case.

I hope that the Financial Secretary will not close his mind and his heart to this matter, but will examine it again and see whether a ruling can be given, if not in the full terms of this proposed new Clause, at any rate taking account of the arguments which have been put forward. I hope that what the hon. Gentleman has said does not represent his last thoughts on the matter.

Sir Leslie Plummer (Deptford)

I am sure that my hon. Friend the Member for Sowerby (Mr. Houghton) gave careful thought to the facts contained in the lucid and logical speech which he has just concluded. It would be unlike my hon. Friend if he did not pay meticulous attention to the problem presented to the House on a matter of this kind. I am sure that he spoke officially from the Front Bench. I am speaking as a Member of the House of Commons and I wish to say that in putting forward the difficulties of Income Tax collectors, or assessors, or whoever handles these problems, my hon. Friend fails, in my opinion, to recognise that compassion should be given to the people suffering at the present time and who would be assisted were this proposed Clause accepted.

I would have thought that the difficulties of Income Tax collectors would be removed were such a Clause put on the Statute Book. I would have thought that, armed with the authority of Parliament, the difficulties of those responsible for the collecting or assessing or fixing of tax would be reduced and in some cases removed. After all, the officials who have to operate our tax collecting machinery are well versed and accustomed to having to discriminate in some way or another. They find no difficulty in discriminating between the amount of tax to be levied on the estate of a man who leaves his fortune in land and that of a man who leaves his fortune in equities or stocks and shares of one kind or another.

I do not think that the Financial Secretary should suggest that we should not review this problem with compassion. It will be a sad day for this nation when the House of Commons rejects compassion as an argument. The argument has also been adduced that a Jewish professor who was fired out of his job in the 1930s should not be treated differently from a professor in this country who, by an unfortunate accident, may have lost his job and is receiving compensation. But there is all the difference in the world between the German professor who has been derided and held up to calumny and has had physical assaults on him, and every vile infliction that the Nazis could think of put on him, and a man who may have lost a job in this country, but who is, at the same time, treated respectably and regarded as a respected member of society.

I know that this is a compassionate argument and that it is very difficult for logicians to say that it should be accepted. But there comes a time when, in my view, logic and the administrative needs should give way to compassion. I put this to the Financial Secretary for reconsideration and I wish to support what has been said by my hon. Friend the Member for Edmonton (Mr. Albu).

7.0 p.m.

The intention of the German Government in their treatment of these people was not that these people should receive full compensation for all that they have suffered. None of the people could receive more than a tithe of what they were entitled to if their injuries had been the result, say, of a road accident. They get only a tithe of what any civilised nation would regard as their just due. For us to say that we shall take some portion of that for ourselves is to admit that the passage of time has hardened our consciences which, at one time, were alive and alert to the sufferings inflicted on these harmless and innocent people by one of the worst Governments the world has ever known.

We all have sympathy for the Income Tax administrators and for the Treasury, but both Departments can get along and have plenty of people to support them. It is our responsibility to help, by our compassion and our actions, the people who have borne the hardships, cruelties and bestialities that would have been our lot if we had lost the war.

Mr. John McKay (Wallsend)

We have to find what is the fair thing to do. The Financial Secretary to the Treasury and my hon. Friend the Member for Sowerby (Mr. Houghton) have dealt very fully with the facts of the situation. They showed that this is a special plea for certain classes and that we might remember classes of our own people who have more reason to ask for help.

Millions of our own people have been crying out for help to enable them to live in a satisfactory way. They, also, are pensioned people. Despite all the pleas that have been made for the special class referred to in the proposed new Clause, I am sure that a much stronger plea could be made for our own people living in our own country, some of whom have not much longer to live. This is special pleading for a section of the community who, apparently, are able to pay taxes. Their incomes are at least large enough to enable them to pay taxes and to have a good standard of life. We have not been told their incomes; we are rather at sea with regard to them. Some hon. Gentlemen have been making this special plea for tax relief, while allowing the taxes on other people to be increased.

Where does justice lie? Knowing how we are penalising millions of our people who are not taxed because they have not a standard of life which we think is reasonable, are we justified in giving special opportunities and tax relief to sections of the community who have had large incomes? A more logical case than has been put by the Financial Secretary and my hon. Friend the Member for Sowerby could not be presented. I am surprised that any hon. Member should join in the special pleading on a basis of compassion. If people are to be helped, let it be those who are not Income Tax payers.

Major W. Hicks Beach (Cheltenham)

As I understand the position, a tax allowance is given in Germany to the unfortunate people who are receiving these compensation payments. Is it not a sound proposition that in this country the appropriate tax allowance at the German rate should be allowed as a deduction from the tax assessment? That would be in the nature of tax relief, and seems a reasonable compromise which should be easy to administer. I hope that the Government will consider whether something cannot be done to help these unfortunate people along the lines which I have suggested.

Question put, and negatived.