*EARL RUSSELL rose to call attention to the imprisonment of Mr. Mark Wilks at the instance of the Treasury for nonpayment of his wife's Income Tax, and to move to resolve—
That in the opinion of this House the present state of the law which renders a man liable to indefinite terms of imprisonment for matters over which he is by Statute deprived of any control is undesirable, and should be amended.
§ The noble Earl said: Your Lordships will have noticed in the newspapers the case of a gentleman of the name of Mark Wilks, who, under a warrant applied for or issued by the Treasury, was taken to Brixton Prison in connection with his wife's taxes, and after spending some time there was, without any particular reason, released. I desire to call your Lordships' attention not only to the circumstances of that case, but to the principles which underlie them. The case itself presents many elements almost of comic opera, except, perhaps, as regards the unfortunate gentleman himself, who probably did not so acutely see the comic side. But the principle on which the Treasury proceeded is one which this House ought to examine and consider.
§ The position in this case was as follows. Mr. Wilks is a schoolmaster, in which capacity he earns a comparatively humble income. His wife, Elizabeth Wilks, practises as a doctor, in which capacity she earns an income, as I understand, considerably superior to his. The exact amount of it I do not know, because Mr. Wilks was unable to inform me any more than he was able to inform the Commissioners of Inland Revenue. He has no means of ascertaining the amount of his wife's income, but it is admitted to be considerably larger than his own. In the ordinary course of events Dr. Elizabeth Wilks, the wife of this gentleman, was 824 asked for the payment of her Income Tax, and, being a Suffragette, she refused to pay. She was maintaining the old Liberal theory, "No taxation without representation." I do not know how far that theory meets with support nowadays. Naturally the Inland Revenue were not going to be done out of their taxes because of the political views of this lady. They therefore adopted the ordinary methods, and finally the method of distraint. But an interesting point in this case is that the distraint was made, not upon the goods of Mr. Mark Wilks, but upon the separate goods of Dr. Elizabeth Wilks—I believe, in one instance, at her surgery where she practises in a house in which and with the furniture in which her husband has no concern whatever. I think that for two years there was distraint.
§ Mrs. Wilks then decided to assert the rights which it appeared to her the Income Tax Acts gave her. She pointed out that under those Acts she was not liable either to make a return or to pay the taxes; that under those Acts the income of a married woman living with her husband was deemed to be his income, and that therefore the obligation was on Mr. Wilks to make the return, and, when the assessment had been made, to pay the taxes. The Treasury accepted that view and applied to Mr. Mark Wilks for the return. Mr. Wilks replied that he was not in a position to make a return of his wife's income, because he had no idea how much it was and she did not choose to tell him. That is a position which, under the Married Women's Property Act, she is perfectly justified in taking up. Her husband has no concern with her income and can receive no information about it except by her courtesy. He has no more right to demand any particulars of her income or to handle her income than I have to handle the income of any of your Lordships. Mr. Wilks, therefore, informed the Treasury that he could not make the return.
The Treasury, after considerable correspondence, decided to assess him upon their own basis. They assessed his income and also that of his wife, and charged both at the rate of 1s. 2d. in the £. That was an incidental unfairness in the case. Mr. Mark Wilks, who was obviously entitled to the 9d. rate on his earned income, was refused that rate because he was not able to make a return of his total income—that is to say, the income of himself and his wife.
A letter was written to him by the Treasury pointing out that this was so. Under date June 8, 1912, the Surveyor of Taxes wrote—
I beg to acknowledge the receipt of your letter of the 4th instant, and to inform you that the only return of your income (1911–12) which I am able to trace contains only particulars of your own salary. This does not constitute a complete return of your total income from all sources as required for the purposes of claiming abatement and relief.… Duty is therefore chargeable on your salary at the rate of 1s. 2d. in the £.
So that the first unpleasant incident that happened to Mr. Willis because his wife would not tell him her income and he had no means of ascertaining it was that his own income was charged at 1s. 2d. in the £ instead of at 9d. The Surveyor then wrote to Mr. Wilks, in answer to a further letter from him, stating that—
In order to claim abatement or relief it was necessary that you should have included in your return your wife's income, and as you did not do so the return that you did make cannot be held to be the 'true and correct statement' provided for by the income Tax Acts, and your statement was accordingly no return in the sense of the decision of the Judges.…
After citing the case in which the decision referred to was given, the Surveyor concluded his letter by offering to explain the matter further if necessary.
§ The next process, having made the assessment, was that they required Mr. Wilks to pay the duties, amounting to £33 12s. 10d., "due from you under the Statutes relating to the Income Tax"; and it was added that the costs of the writ amounted to £1 6s. 8d., which "must be paid together with the duties." Then there ensued a correspondence between Mr. Wilks arid the Inland Revenue, in which they pressed him to pay and added that if he did not they would unfortunately be obliged to take the unpleasant step of applying for his commitment. The letters, of course, were exceedingly polite and courteous, but they contained the unpleasant hint all the time that the thing would end in his imprisonment if he did not pay. Mr. Wilks stated that he did not receive his wife's income; that he had not got it to pay with; that his own income—£150 a year—was barely sufficient for his maintenance, and that it was impossible for him to raise such a sum of money as they required him to pay. And finally, after considerable correspondence with the Treasury extending over from twelve to eighteen months, a writ was 826 issued and Mr. Wilks was taken up and lodged in Brixton Gaol. While in Brixton Gaol he applied to be released. The Home Secretary, I think I am right in saying, was not able to interfere. Mr. Wilks was held there by the Commissioners of Inland Revenue, and I do not think the Home Secretary could have released him.
Mr. Wilks sent a petition to the Chancellor of the Exchequer and to the Commissioners of Inland Revenue stating his position, and they replied to the effect that they were unable to release him. He received a letter from the Inland Revenue, dated September 24 last, as follows—
The Board of Inland Revenue have had before them the petition addressed to the Secretary of State for the Home Department, in which you apply for your immediate release from prison—
I might add that meanwhile, of course, this gentleman's prospect of continuing in his employment was suffering, and he was running considerable risk of losing his position—
In reply thereto I am directed to acquaint you that the Board have not at any time accepted, and cannot now accept, the view that payment of the Income Tax, for which judgment was obtained in the High Court, has been impossible for you owing to your lack of means—
I do not care whether it was or was not possible. It does not affect my case in any way whether Mr. Mark Wilks could have scraped together £33 out of his income to pay these duties or whether he could have persuaded his wife to lend hint the money. His contention was that out of his income of £150 a year he had not the £33 to pay with. The letter proceeds—
I am to remind you that this matter has been the subject of correspondence for upwards of two years. The Board's information is that during that period you have personally been in receipt of a regular income out of which von could have paid the amount due if you bad been willing to do so. But, in spite of explanations of the law and warnings of the consequences of non-payment, your attitude has throughout been one of refusal to recognise the liability which the law clearly imposes upon you. In these circumstances the Board desire, before considering the question of your release, to know what proposal you have to make with a view to securing the satisfaction of the debt due from you to the Crown.
§ I pause here to say that in the remarks I make this afternoon I do not challenge the complete legality of Mr. Mark Wilks's imprisonment. Indeed, its legality is my ease. The law is an absurd law; it is contrary to the Married Women's Property Act, and should therefore at the earliest possible 827 date be amended. I in no way challenge the legality of what was done, but I do challenge its natural justice and its common sense. There was. I take it, no further correspondence with the Commissioners; but without Mr. Mark Wilks, so far as my information goes, having made any arrangement to pay the money or any proposal for the liquidation of the debt due to the Crown, and most decidedly without his having paid it, he was, after a certain period, released from Brixton Prison. Now, what is exactly the position of the Treasury in this matter, and what attitude do the Government take up in enforcing this rather antiquated provision in the Income Tax Act? If they take up the attitude, not only that it is legal—which I admit—but that it is a justifiable and a reasonable and proper law, why have they released Mr. Wilks? I do not understand what justification there can be for the releasing of Mr. Wilks in these circumstances. There was ample legal justification for his imprisonment, and I think it is not altogether a regrettable thing that that course was taken by the Treasury, because it has called attention to this provision of the law. The provision is such that, in the case of a man totally impecunious married to a wife with a considerable separate income, it would be absolutely in the wife's power to have him detained in prison whenever she chose not to make a return and not to pay her Income Tax. We are told sometimes that legislation is unduly favourable to men, but this particular legislation might hit us very hardly if our wives were inclined to take advantage of it.
§ This is really an antiquated piece of legislation no longer appropriate to the circumstances of the case. When a wife's income was in effect her husband's income, when he had control of it and was able to use it, it was extremely reasonable to require him to make a return of it and to let the obligation for any taxes imposed upon it fall upon him. But the whole circumstances have been altered by the passing of the Married Women's Property Act, and the provision is no longer justifiable. In addition to that, it is unreasonable because you are putting a particular difference in taxation upon two people who live together when they happen to be husband and wife as distinct from the case when they are father and son or two brothers or two sisters in the same house; and incidentally it does not tend to the establishment of the 828 regular relation of matrimony, because you put a distinct premium upon two people living together without the legal bond of matrimony, for if only they were not lawfully married they would then not be liable to this harsh provision of the Income Tax Act. That also is a point that might well be considered. A Question was asked of the Chancellor of the Exchequer on this subject in another place last week, and I have seen his answer variously reported. In one newspaper he was made to say that he would not continue to enforce this provision of the law while he was considering its amendment, whereas in another report the answer was that he would not interfere. However that may be, the sooner this provision of the law is altered the better, for it is obviously an unreasonable provision imposing upon a man as it does an obligation which another Statute prevents him from fulfilling, and I think that the Chancellor of the Exchequer, having already had since 1910 in this particular case to consider the point, might have introduced an amendment in his Budget.
§ I do not know whether the answer to-day is going to be that because this provision is on the Statute-book it is therefore perfectly right and proper and ought not to be changed. I dare say the practical answer in another place against any pressure is that, a Liberal Government being in power, it is not fitting that it should be disturbed by Liberals. I do not take quite that extreme Party view, and I do not think that a particular law is right because it is a Liberal Government which has enforced it. I hope, therefore, that we shall be assured this afternoon that at as early a time as possible this provision, which is quite out of date and in no way accords with existing facts, will be considered and the law amended so as to place it upon a basis where it can be enforced without causing an outcry. I suppose the reason Mr. Wilks was released was that the Government felt that it was ridiculous to keep him in prison and that they had no moral right to so detain him. That being so, I beg to move the Motion standing in my name.
§ Moved to resolve, "That in the opinion of this House the present state of the law which renders a man liable to indefinite terms of imprisonment for matters over which he is by Statute deprived of any control is undesirable, and should be amended."—(Earl Russell.)829
§ LORD ASHBY ST. LEDGERS
My Lords, I am far from making any complaint, such as my noble friend seemed to anticipate, that he has brought forward this case of Mr. Wilks, and I am free to admit that there is a distinct illogicality in the situation he has revealed. That illogicality is recognised by the Chancellor of the Exchequer, who, in reply to a Question addressed to him in the House of Commons on the ninth of this month, made a statement which I will read to the noble Earl as he does not seem to have a very certain view of what that answer was. The Chancellor of the Exchequer said—I will consider the question of amending the law so as to obviate the necessity of such action—that is to say, the imprisonment—But in the meantime I am certainly not prepared to instruct the Revenue authorities to refrain from administering the law as it stands.I would, with your permission, like to be allowed to say one or two things on the observations which the noble Earl has addressed to your Lordships, and I desire to make it clear to the House that Mr. Wilks, who seems to have appealed for public sentiment on the ground that he was unable to pay, was not at all in that position. Mr. Wilks was a schoolmaster under the London County Council and in receipt of an income varying from £160 to £170 a year. His wife, who practises as a doctor, is supposed to be in receipt of an income of about £700 a year, so that it is idle to try and make out that these two people were unable to pay the Income Tax demanded.
§ LORD ASHBY ST. LEDGERS
It is very difficult for the noble Earl to suggest that Mr. Wilks himself was unable to pay the Income Tax, lie was enjoying to a great extent the proceeds of his wife's income, he was living in a house which is said to be her house, and I have no doubt whatever that he was in a position to pay this tax; and if the Revenue authorities had believed that he was unable to pay, then the same pressure would not have been exerted as was exerted in the present case. The fact of the matter is that there is every reason to believe that this is not a normal case exemplifying the hardship of the present system. This is something in the nature of a political demonstration, with 830 the objects of which we may or may not sympathise. But when we are invited to consider the justice of the present law and procedure I think we have a right to examine the circumstances in which the protest is made, and I hope the House will bear these in mind when they consider both the present state of the law and the action of the Department in question.
The Revenue Department is charged with the duty of collecting the revenues. The successful establishment of Mr. Wilks's contention would involve a very serious loss to the Exchequer, and it is obviously the duty of the authorities to take all the steps at their command to prevent such loss. The only two methods which the Revenue Department has in these cases is to proceed either by distraint, or, in default of distraint, by imprisonment. It may occur to your Lordships that, seeing that Mr. Wilks was in possession of this income from the London County Council, there should have been some power to attach his income to meet the debt and avoid the necessity of proceeding by imprisonment. I am advised that there is no such power, and that therefore it was not open to the authorities to take such a step. It may be a matter for consideration whether the ordinary proceedings of attachment of income might not be extended to cover Crown cases, and also whether a debt to the Crown should not be recoverable on the husband's or wife's goods when they are living together. If that had been possible the present case would not have gone as far as it has. But I think the noble Earl knows that that is not the case, and that directly Mrs. Wilks protested that the furniture was hers the Revenue authorities were unable to proceed by distraint.
A word on the question of the general justice of making the husband responsible for the payment of Income Tax. In the vast majority of cases the husband is the salaried partner, and where he is not he almost invariably benefits from his wife's income. I may remind your Lordships that this procedure is not applicable to the case where the parties are separated. It is only where the husband and wife are living together and presumably where the husband is enjoying his wife's income to some extent that time present provisions apply. Unless one party is made responsible it is found in practice that the goods upon which the Revenue Department would naturally 831 distrain have the habit of belonging to the other party, and in that way the security for the Crown debt disappears.
I would like to make this further point, which I think bears upon the case. Exemption and abatement, all relief of Income Tax, is calculated on the basis of joint income. If you aggregate the income for purposes of relief and separate it for purposes of collecting the tax, immense difficulties of apportionment arise. It seems necessary to have one clear and simple method of dealing with it. If the incomes are taken together for purposes of abatement they should be taken together for purposes of collection, and, if that is so, one party of the two must be made responsible for the Income Tax. Perhaps you may say, Why not treat the husband's and wife's incomes as entirely separate? That is a suggestion which appears to have some advantages, but it would be attended with much loss to the Exchequer, and on that ground alone I think it is not likely to be contemplated. But, my Lords, after all I admit—and my right hon. friend the Chancellor of the Exchequer has admitted—that there is a certain substratum of hardship in the fact that a husband should be imprisoned for failure to pay the Income Tax on his wife's income, and I think there is something especially out of date in the fact that such imprisonment can be at official discretion.
The noble Earl asked for the justification for the release of Mr. Wilks. This imprisonment is intended to be a deterent in other cases, and this case having gone as far as it has and Mr. Wilks having been in prison it was thought that this result had been to a great extent achieved, and that other husbands were not likely to put themselves to the same inconvenience which Mr. Wilks had welcomed. That is the justification of Mr. Wilks's release. It is true that the Treasury regulations which govern this subject were framed many years before the Married Women's Property Act of 1872, and therefore there is a certain anachronism in maintaining the present Treasury regulations in view of that Act. Moreover, I admit that the Super Tax, which, of course, is a recent impost, treats a woman's property as separate from her husband's. There is therefore a good deal to be said in favour of some amendment of the Treasury procedure in these cases, and I am very glad that my right hon. friend the Chan- 832 cellor of the Exchequer has promised to take the matter into consideration. At the same time, whatever may result from those considerations I think the noble Earl will agree that the new provisions must be of such a kind as to safeguard the Treasury from the serious losses which might arise if any ill-considered action were adopted.
§ THE MARQUESS OF LANSDOWNE
My Lords, I do not know whether the noble Earl who introduced this subject this evening is satisfied with the statement made on behalf of His Majesty's Government. The speech of the noble Lord who has just sat down showed, at all events, that they are prepared to admit that the present state of the law is not entirely satisfactory. The noble Lord admitted that there was what he called a substratum of hardship, and that His Majesty's Government are prepared to consider whether at certain points the law should not be amended.
Although I do not pretend to any knowledge of the intricacies of this matter, there certainly seem to he sonic points at which the operation of the law is extraordinarily inconsistent. Take, in particular, the contradiction between the manner in which the property of married couples is treated, in the one case for the purpose of Income Tax, and in the other for the purpose of what we generally describe as the Death Duties. Unless I am quite wrong, in the case of assessment for Income Tax during the joint lives of husband and wife the separate income of the two is aggregated and treated as one single income. The result of that was touched upon in the speech to which we have just listened. The effect of it is that there are people who come within the Income Tax limit who but for that condition of the law would not do so; there are people who cannot claim a rebate of Income Tax who but for that condition of the law would be able to claim it; there are people again—the noble Lord referred to them—who are brought within the operation of the Super Tax who would not be in that position if the law were different. All those features of the case are, no doubt, advantageous to the Treasury, because they bring more grist to the Chancellor of the Exchequer's mill.
Take, on the other hand, the case of the Death Duties. In that case when the husband or wife dies the estates, which were pooled for 833 Income Tax purposes, are treated as separate estates. In some cases that works very hardly indeed. Take the case of the death of a professional man. The breadwinner of the family disappears, and the widow obviously finds herself in very straightened circumstances; yet Death Duties are charged upon any part of the husband's estate which is retained by the survivor. It is rather difficult to see why a married woman should pay Death Duties on an income which she has in fact shared with her husband during his lifetime and on which Income Tax was levied upon the assumption that it was not a separate income but a joint aggregate income. I hope these matters will be looked into, and I think the noble Earl was justified in bringing this Question before the House.
§ THE LORD CHANCELLOR, (VISCOUNT HALDANE)
My Lords, no doubt it is true, as the noble Marquess has just pointed out, that the Income Tax and Death Duty laws are full of anomalies. In the case of Income Tax, the law dates from a period when the position of married women was very different from what it is to-day, and legislation has become commonplace which would have been looked upon with the utmost disfavour half a century ago. To-day we treat the income of a married woman as nearly as possible as though it were the income of an unmarried person, and yet the machinery for enforcing the Income Tax laws remains in a large measure what it was half a century ago. The result of that, of course, is hardship. I entirely agree that the case of Mr. Wilks is one where there is an anomalous state of the law which cannot be defended, and my right hon. friend the Chancellor of the Exchequer, as Lord Ashby St. Ledgers has told the House, has undertaken to consider it. When I say that I do not wish to be understood to convey that the matter is other than an intricate one to deal with. The machinery for the collection of Income Tax and the machinery for the collection of Death Duties both give rise to very complicated problems. Things which look simple on the face of them bear, when you come to look into their real significance, a quite different aspect. Some of the points touched on by the noble Marquess are points which well deserve our attention, but we cannot be too careful lest in making 834 changes we stumble into the temptation, which is very great to those who are fashioning machinery for the collection of the revenue, to take advantage of provisions which belong to a past state of the law while at the same time taking advantage of changes which have been made in quite other directions. The whole subject is one which is not likely to escape our consideration, and I hope my noble friend will be content with the discussion he has elicited and not press his Motion.
My Lords, I think in all the circumstances I might perhaps withdraw my Motion, although in itself it is absolutely harmless, because it merely states that the present state of the law which renders a man liable to indefinite terms of imprisonment for matters over which he is by Statute deprived of any control is undesirable, and should be amended. If the noble Lord will accept the Motion, I should prefer that course, so that we may have it on record that this state of the law was called attention to arid that it was thought undesirable. I do not found myself for one moment on the particular case of Mr. Wilks or on any other particular case, but simply on the fact that it is undesirable, and particularly undesirable in connection with taxes, to have laws which on the face of them seem inequitable and unfair.
§ Motion, by leave, withdrawn.