GHANA (EX-CIVIL SERVICE PENSIONERS) (Hansard, 11 February 1964)

§ 34. Dr. KING
To ask the Secretary for Technical Co-operation what is the result of the representations which have been made by Her Majesty's High Commissioner to the Ghana Government on the burden of the new tax imposed on overseas service pensions by that Government.

§ 35. Mr. RIDLEY
To ask the Secretary for Technical Co-operation what further action he has now taken with regard to the imposition of a tax of 7s. in the £ on the pensions of former colonial servants of Ghana.

§ 36. Mr. WOODNUTT
To ask the Secretary for Technical Co-operation if he will now make a statement on his negotiations with the Government of Ghana on the burden of taxation imposed by that Government on overseas service pensioners.

§ The Secretary of State for Technical Co-operation (Mr. Robert Carr)
With permission, I will now answer Questions Nos. 34, 35 and 36 and I apologise that my Answer must be somewhat lengthy.
I am glad to inform the House that an agreement has been reached with the Ghana Government which entirely removes for pensioners resident in this country the discriminatory element in the tax imposed by the Ghana Government last October.
As a result, the Ghana tax will be at the same effective rate as the pensioner pays on his total income taxable in this country provided only that this 218 amount of tax is not less than that paid by a resident in Ghana with an income equivalent to the pension.
Because of double taxation relief this means that the great majority will have no additional tax to pay overall even if their Ghana pension is their only source of income. In fact, most pensioners are likely to have some additional income, partly because of our own pension supplements.
The Ghana authorities are suspending all tax deductions for the next three months while the detailed application of the new formula is being settled. The adjusted to will be levied from May onwards.
My Department, in agreement with the Board of Inland Revenue, will send a short statement to all Ghana pensioners resident here explaining how the new formula will work.
My right hon. Friend the Secretary of State for Commonwealth Relations and I are grateful to the Ghana Government for their co-operation in reaching this agreement.

§ Dr. King
May I ask the Minister whether he is aware that hon. Members on both sides of the House would wish to express their gratitude to the Minister and to the High Commissioner of Ghana for raising this matter with the Ghana Government, and particularly for the very happy result of the efforts they have made over the past two or three months?
Was not the root trouble that the Ghana Government had the idea that Income Tax in this country was a flat-rate tax of roughly one-third of one's income, whereas under the complicated pattern that we have most of the Ghana pensioners would have paid not 7s. or 8s. in the £, but no shillings in the £?
We are all very grateful, and I am sure that my hon. Friends on both sides of the House, and the Ghana pensioners, would wish to thank the Minister for what he has done.

§ Mr. Carr
I thank the hon. Member for what he said. I shall see that his message is conveyed to the appropriate quarters. I think that the hon. Gentleman is probably right in suggesting that the Ghana Government did not foresee the effects of the tax which they introduced last October.

§ Mr. Ridley
May I add my congratulations to my right hon. Friend on negotiating this settlement and tell him that this will reassure a large number of ex-colonial pensioners of the determination of Her Majesty's Government to maintain the pensions of her former civil servants? May I ask my right hon. Friend whether if, at the end of the day, it transpires that there are any Ghana pensioners who will suffer still as a result of what has happened, he will look sympathetically at their cases with a view to trying to help them?

§ Mr. Carr
I am glad that my hon. Friend feels—and I am sure that all pensioners will agree with him—that this is an example that Her Majesty's Government are determined to look after the interests of her pensioners. We do not know the circumstances of individual pensioners because the tax liability of each one cannot be known until all their incomes are taken into account. Therefore, I cannot make any definite statement, but pensioners will no doubt be examining the effect of this new formula on their circumstances. If there is evidence of real hardship as a result of this, we shall, of course, be prepared to consider the matter.

§ Mr. Woodnutt
May I add my congratulations to my right hon. Friend and say how warmly this news will be welcomed by all ex-colonial servants who have been in a sorry plight indeed during the last few months? I am concerned about the future, and I wonder whether my right hon. Friend, to avoid this sort of thing happening again in other territories, would consider opening discussions with the Governments of ex-colonial territories with a view to Her Majesty's Government making a clean sweep of all this and taking over the pensions on a basis to be agreed between the Governments concerned?

§ Mr. Carr
I know that that is something which many pensioners would like to see happen, but it is a long-established principle that the Governments of the countries in which our former civil servants served should take this responsibility. I think that this really is the right principle, and that the right course is for Her Majesty's Government to make sure that the obligation is honoured; and that, so far, we have always managed to do.

§ Mr. Wade
I also heartily welcome the statement. Will tax that has been suffered be reimbursed? Alternatively, will there be some kind of rearrangement, which, at the end of the tax year, will have the effect of restoring the balance?

§ Mr. Carr
I think that the hon. Gentleman can be assured that at the end of the tax year the whole thing will be properly adjusted. The hon. Gentleman may recall that in my original Answer I said that all tax deductions for the next three months would be suspended.

§ Mr. F. M. Bennett
While joining in the general appreciation which has been expressed, may I ask the Minister whether he can say that in this information which is to be forwarded to individual pensioners some details will be given of the basic rate of deductions from similar pensions within Ghana itself so that those concerned will be able to judge whether they will get back to the point of starting, or whether they will be worse off even after the arrangements have been made?

§ Mr. Carr
I shall take account of what my hon. Friend said.

§ Mr. Dalyell
May I ask the Minister whether this is to be retrospective? I did not gather that from his answer to the hon. Member for Huddersfield, West (Mr. Wade).

§ Mr. Carr
I think that the House can be assured that at the end of the year the total tax paid by pensioners will be what would be paid on the basis of the agreement that I have announced. In other words, they will not suffer by the end of the year as a result of what they had deducted from their pensions in December and January.
As I have said, as a start to that, the Ghana Government will make no deductions at all during the next three months.