§ Question proposed, That the Clause stand part of the Bill.
§ Mr. Houghton
The Committee will expect me to utter my customary lamentations on the abolition of any form of taxation, but I do not think that we should pass, as a matter of form, the abolition of a tax which dates back to 1692, and which was the forerunner of our Income Tax system.
The yield from land tax has been falling in recent years because of the exoneration of small amounts and the compulsory redemptions that have been taking place under earlier legislation. I suppose that the Committee thought that land tax would be left to peter out, because of the compulsory redemption of the tax, accompanied by the transfers taking place after 1950—that if we waited long enough it would disappear of its own accord. I suppose, too, that those who have redeemed their land tax in recent years may feel that they have been a little hardly done by. When we pay a price to redeem a tax, and then find that other people have it abolished without fee or payment, there is a feeling of comparative grievance.
The yield in 1961-62 was L191,000, but that of itself does not justify abolishing a tax. Schedule B should have been abolished years ago on the basis of the small yield, yet it has lasted until now. I think that I could claim to have put down on the Order Paper on the Finance Bill more new Clauses abolishing Schedule B than any other hon. Member, but I have never had the good fortune to have that new Clause called on any Finance Bill for the last 15 years. Then, lo and behold, the Chancellor of the Exchequer sticks it in his Finance Bill. This is the sort of grievance that the Opposition have to endure.
Now we find the land tax going. Here, we are not only abolishing the land tax but we are abolishing one of the pranks played on the new recruit in the Inland Revenue on All Fools Day. When I 768 entered the Inland Revenue many years ago, on 1st April I was told to go down to the collector to pick up the land tax additionals. There is no such thing as additional assessments for land tax, as the Committee will understand, so that was one of the fruitless errands on which one was sent on 1st April in those days. Now it can never happen again. It is like the new recruit to the Army being sent out to whitewash the "Last Post".
Here it goes, and the Land Tax Commissioners with it, and the Clerk to the Land Tax Commissioners—these ancient functionaries. We should say farewell to them in a spirit of thanksgiving for all the work they have done for Chancellors of the Exchequer in the past. Where would the State have been today without the land tax since 1692? We could never have got through the Napoleonic wars and might have been a province of France for the last 100 years or more.
I think that this is an occasion, and for the sake of £191,000 a year the Chancellor is scrubbing out of our taxation system an impost of great antiquity, of modest proportions, easy to collect, and of great sentimental interest to anyone engaged in the field of taxation. I was giving a lecture this morning to a distinguished body of visitors from overseas. In the course of comments on what I had said, one gentleman from overseas said, "The speaker seems to be very enthusiastic about taxation for its own sake". Well, when one has been connected with the Inland Revenue for 30 years, naturally one regards taxation as one's business, and one is bound to have great affection for different branches of one's business.
After all, the proportion of tax which a collector collects is of great interest to him as well as to his head office, because that is an index of the success of his business. I do not think that we should lightly abolish forms of taxation which have engaged the attention of successive generations of Inland Revenue officials. However, there it is. Another "Goodbye". Two "Goodbyes" in one Bill. I am bound to say that I sit down under the stress of great emotion.
§ Mr. Robert Mathew (Honiton)
I cannot join in the lamentations of the hon. Member for Sowerby (Mr. Houghton) at the passing of his professional and traditional friend. I greet with pleasure any 769 abatement of taxation, and the disappearance of this historic tax, which is now outworn, is much to be welcomed.
To revert to a point which the hon. Gentleman mentioned rather casually, the Clause will, it seems to me, lead to some inequity. I refer to subsection (3) and the question of land tax, which has already been redeemed where the land has changed hands since 1949 and the new owner, at some time between 1949 and 25th March this year, has had to redeem the land tax on his property at a sum equal to twenty-five times the annual tax. Under the Clause, the liability remains. The money has already been paid. There will, therefore, be two classes of taxpayer over the dividing line who will be treated differently.
I concede at once that, when changes in taxation of this kind occur, it is necessary to draw a line somewhere, and there will always be some difference in luck between different people, according to where the line falls. In this case, I submit, the result is unduly harsh and rigid. Twenty-five times the annual tax can, in certain cases, be a very large sum. I ask my right hon. Friend to look at the matter again. Cannot the rigid harshness between the lucky and the unlucky—that is what it is—be mitigated? Is it possible to make the change by a phased operation so that those who have still a major part of the twenty-five years left to run at 25th March will be entitled to a remission?
There are, I believe, a number of cases where the inequity will be obvious. There is no very large sum involved because the tax is outworn and is bringing in very little in 1963. It is inequitable that the mere chance of time should entail that one class of owner has had to meet the tax liability in full whereas another gets off scot-free and will never have to pay at all.
No doubt, there will be drafting and administrative difficulties in what I suggest, but it is the duty of the Government in taxation matters to go out of their way to be fair as between citizens whose basic tax liability was identical before an arbitrary date. I ask my right hon. Friend to make the necessary adjustment on Report.
§ Mr. Wade
I welcome the abolition of the tax. It accords with my views on the radical reform of taxation and the 770 abolition of unnecessary and antiquated taxes. After listening to the sorrowful speech of the hon. Member for Sowerby (Mr. Houghton), which almost brought tears to our eyes, I wonder whether the spokesman of the Treasury can inform us to what extent the change will give rise to reduancy in the Department of Inland Revenue. If the answer is satisfactory, it may reduce somewhat the hon. Gentleman's grief.
§ 9.45 p.m.
§ Colonel Sir Harwood Harrison (Eye)
I congratulate my right hon. Friend on removing this pernicious and, to my mind, unfair tax on a certain section of our population. I was surprised to hear the words of the hon. Member for Huddersfield, West (Mr. Wade). When I saw the large number of two of the Liberal Party in the Committee, I thought that they had, perhaps, come to oppose the Clause since, as I remember, a famous Chancellor of the Exchequer, afterwards the Prime Minister, of the Liberal Party, over fifty years ago, was very keen on land taxes.
§ Sir H. Harrison
That is typical of the Liberal Party. It never sticks to any principles.
I do not think the hon. Member for Sowerby (Mr. Houghton) need be so tearful about the passing of this tax, because it was his own Government which got a great deal more out of these taxpayers by the Act of 1949.
The point that I wish particularly to put to my hon. Friend the Financial Secretary for elucidation was this. In choosing the date on which this tax ends as 24th March, I presume that it is clear that in any change of property on 25th March, I963—and many properties are sold on Lady Day—the people concerned will not have to redeem the tax. I have had one or two letters on this point. It is difficult to fix this date, but, as far as I can see, I think that my right hon. Friend has done the fair thing. I add my plea to that of my hon. Friend the Member for Honiton (Mr. Mathew).
§ Mr. Barber
Perhaps I can deal, first, with the points made by my hon. Friend the Member for Honiton (Mr. Mathew) 771 and my hon. and gallant Friend the Member for Eye (Sir H. Harrison). My hon. and gallant Friend is correct in thinking that the land tax will be abolished as from 24th March this year, which is the end of the land tax year 1962–63.
The point which my hon. Friend the Member for Honiton raised, which was echoed by my hon. and gallant Friend the Member for Eye, was considered by the Chancellor of the Exchequer before he announced this proposal in his Budget speech. We recognised that immediately we decided to abolish the land tax altogether there would inevitably be some disappointment as between those who fell on one side or the other of the date which we chose for abolition.
It is specifically laid down in subsection (3) that the Clause is not toaffect any compulsory redemptionunder the relevant Clausewhere the date on which the property became liable to redemptionfell on or before 24th March this year. That subsection was included in the Clause to make the position quite clear beyond argument to everyone concerned. In fact, in strict law, I think that it is probably unnecessary, because there is nothing in subsection (1) which removes the liability to compulsory redemption in these cases.
As my hon. Friend so fairly said, whenever the law is changed to remove a liability, the change may operate from a fixed date, and, whatever date one chooses, there are bound to be people whose cases fall just on the wrong side of it and who think that they should have had the benefit of the change. To put the operative date back for a week, a month, or even six months would not remove grievances of this kind. It would merely transfer them to a different set of people.
It would have been impossible simply to provide that outstanding redemptions should not be collected because this would merely have been penalising the prompt payer in favour of the dilatory payer. I assure my hon. Friend that we considered the point which he raised most carefully. If it were a novel point which my right hon. Friend has not con- 772 sidered in relation to the Budget, obviously it would be right for me to say that we would think about it again, but I know my hon. Friend and my hon. and gallant Friend well enough to realise that they would prefer me, on a matter like this, to be perfectly frank and to tell them that we were faced with this very problem and gave it our consideration before the change was announced, and that we came to the conclusion that it was impossible to deal with the matter in any other way.
The hon. Member for Sowerby (Mr. Houghton) referred to the fact that the land tax is a remnant of an old tax which, I think he said, was instituted in England in 1692. In fact, I think that I am right in saying that it existed rather earlier in Scotland. In 1798, Mr. Pitt stabilised the charges on land and enabled land owners to redeem for a capital sum. Since then the value of this tax has dwindled. I have the figures here, but I do not want to spoil the hon. Gentleman's evening further by rubbing in the details of what has been happening to this tax over the years. Suffice it to say that we have now abolished it with effect from 25th March.
The hon. Member for Huddersfield, West (Mr. Wade) asked about redundancy which might arise as a result of this Measure. I think that with the additional work which the Inland Revenue has to do, this is unlikely to occur. The hon. Member himself referred, I thought somewhat regretfully, to the possible administrative savings which will occur as a result of this, and he will, I think, be interested to know that in these days of affluence, and, to some extent, inflation, there are five clerks to the Land Tax Commissioners who are not also clerks to the General Commissioners. I am told that they are paid at rates from £100 downwards. These gentleman will, from 1st October this year, cease to receive that remuneration.
I sympathise very much with the feelings of the hon. Member for Sowerby. I have rarely been so upset by a speech from the Opposition Front Bench.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.