THE INCOME TAX. (Hansard, 14 July 1910)

LORD DENMAN
My Lords, I am much obliged to my noble friend for postponing his Question until this afternoon. As he is aware, a similar question was answered by the Chancellor of the Exchequer in another place last week, but as the noble Earl has somewhat developed his case perhaps I may be allowed to go a little more into detail in the matter. The complaint of the noble Earl, as I understand it, is that although the Finance Act of 1909–10 did not become law until April of this year, people with earned incomes of under £2,000 were obliged to put in a claim for relief before September 30 of last year, or, if they failed to put in a claim by that time, the relief was refused by the Inland Revenue. On the face of it, that may seem a hardship upon certain individuals, but I submit to your Lordships that as a matter of practice, with the possible exception of isolated cases, no real hardship has in fact occurred, because everybody knew last year that the Income Tax would be imposed sooner or later. Whatever happened to the other taxes or to the Budget itself, it was perfectly certain that sooner or later the Income Tax would be collected, and it was well known that the same relief would be granted as in previous years. As early as May of last year Form No.12, which provides space for inserting a claim for this relief, was issued to all those persons who were likely to be entitled to claim relief. They received that form, filled it up, and returned it as usual to the Inland Revenue by the specified date. There may have been cases where people did not receive that form. But I would suggest that the great majority of these professional gentlemen were well aware of the practice of the last few years, and I think it is very improbable that all those who have failed to make a claim have failed to do so because of the Budget not becoming law last year. I am informed by the Inland Revenue that ever since this arrangement has been in force—namely, since 1907—there have been a small number of applications for relief made each year after September 30, but in these cases relief has always been refused, and the Inland Revenue see no reason why, in the very few cases that have occurred this year, they should depart from the ordinary practice in the matter.

EARL RUSSELL
I should like to ask the noble Lord one or two questions on the statement he has just made. It appears, as I understand his answer, in the first place that I am correct in stating that although the liability was not imposed by law until April, 1910, the claims for relief should have been made before September 30, 1909. That incidentally seems to me a very strange constitutional doctrine to lay down. I do not know what the noble Lord means by talking about people being well acquainted with this practice, which only came into force in 1907. What does the noble Lord mean by saying "people are well aware"? Is it considered to be the business of the taxpayer to study, not the Statutes which impose taxation, but the debates in Parliament and discussions in the political arena, and to keep himself informed of what is said to be likely to come to pass? I have taken the opportunity of searching through the debates to see what statement at any time was made to the House of Commons that the persons entitled to pay at the 9d. rate would have to make their claims before the Finance Bill became law. I have been unable to find that any such public notice was given at any stage of the Bill in the other House by the Chancellor of the Exchequer, and therefore I think people were legitimately entitled to assume that they could well wait until some legal obligation was imposed upon them before attending to the forms. At the time the forms were sent there was no statutory obligation to fill them up. I understand that these persons are to be penalised because they did not take the Budget as introduced by the Chancellor of the Exchequer as the law of the land. I suggest that it is a novel doctrine to lay down that the taxpayer must take the Budget speech of the Chancellor of the Exchequer as the law. It is farcical to say that under a Statute passed in April, 1910, relief must be claimed in September, 1909. I am unwilling to believe that the present Chancellor of the Exchequer really wishes to penalise people with small incomes, and instead of 9d. in the £ to make them pay 1s. 2d. on their earned incomes. The Treasury should have regard to the peculiar circumstances of last year and to the extreme hardship of this case. I hope that a more reasonable view will be taken of this matter, that these people will be given the same opportunity as has been extended to those entitled to the shilling 1076 scale—namely, opportunity up to July 31 of this year to make their claim—and that they will not be deprived of this relief by a not very creditable trick.

§ LORD WELBY
My Lords, I wish it were possible for His Majesty's Government to pay attention to the remarks of my noble friend. The situation this year was a very remarkable one, and I think there is a good deal of reason for the arguments which my noble friend has addressed to the House. I quite agree from my experience in these matters with Lord Denman that in ordinary years probably little hardship occurs from the practice of the Department, but considering the very unusual condition of affairs last year I think there is some ground for asking the Treasury to exercise clemency in the matter. I only say this in the very peculiar circumstances of last year.

§ LORD JOICEY
My Lords, I think it is an extraordinary thing to say that a return claiming a rebate must be made by a date long before the Government have any power to enforce payment of the tax, and I consider that this is a very dangerous precedent to set up. I trust that the Treasury will reconsider the matter and show some clemency, because, after all there are only a few persons who will not get the benefit of this rebate.

§ LORD HENEAGE
My Lords, I wish to take exception to the doctrine which appears to be laid down that it is the duty of the public to find out beforehand from discussions in the other House what are likely to be the taxes imposed for the year. It has always been understood that as soon as a Bill became law the debates in the House of Commons and the promises made by Ministers were null and void, and that the only thing which lawyers could recognise was the enacting sections and not even the preamble to the Act. Therefore I do think it is rather hard in the case which the noble Earl has brought forward that these persons should have to suffer. I agree with Lord Welby that this is a matter in which the Treasury might act leniently, especially as the cases are so very few, and at any rate conform to what is generally known as the rule of law.

§ THE EARL OF CREWE
My Lords, I have no doubt that my noble friend Lord 1077 Denman will convey to the Treasury the views which have been expressed by noble Lords in this discussion, but I am bound to say, although the noble Earl who introduced the subject pleaded his case with his usual skill, I cannot remain otherwise than unconvinced, and for this reason. Noble Lords who have spoken have seemed to imply that some obligation was placed upon these Income Tax payers to do something which they would not wish to do, almost, indeed, as though they had had to make some payment in the month of September although the payment might never fall due. But what they were asked to do by September last was to exercise a privilege, and whether the Budget passed or not it would do them no harm to have exercised that privilege. I should have thought that it was the most obvious course for any man to send in his form in the usual manner without reference to the political situation. My noble friend behind me has been accused of laying stress upon 1078 the reading of Parliamentary debates. It seems to me that the case is precisely the opposite. If these gentlemen, instead of wasting their time in studying the debates and attempting to prophecy the political situation, had attended to their own affairs and taken the ordinary step which they would have taken in any other year, and sent in their claim for relief, they would not have fallen into their present trouble. I am very sorry indeed that any people should suffer, even through their own fault. I believe, as my noble friend says, it is the fact, though it seems strange, that every year people of moderate income do not claim the rebate, and although I have no doubt my noble friend will make the proper representations to the Treasury I cannot feel that the case is quite so strong as some of my noble friends behind me seem to think.