§ LORD LAMINGTONMy Lords, I rise to call attention to the statement made by the Chancellor of the Exchequer in the House of Commons that the Mineral Rights Duty was the only contribution made by the owners of mineral rights in respect of the income from land. where every other interest had contributed to the local expenditure, and whereas this statement is not true in the case of Scotland, to ask His Majesty's Government to give relief from the tax to Scottish owners of mineral rights.
It will be within your Lordships' recollection that when this Mineral Rights Duty was first imposed it was done on the plea of the Chancellor of the Exchequer that mining royalties made no contribution to local taxation; and the other day, when a debate was raised in another place upon a request that payments made in respect of that duty and the Undeveloped Land Duty should be deducted for the purpose 306 of Super-Tax, the Chancellor of the Exchequer repeated his observation. He said—
it is not Income Tax in any sense of the term. The position is that it is a contribution made by the owners of these mineral rights in respect of the income from land. 'Where every other interest in land is contributing heavily to local expenditure they are contributing nothing. You may have a colliery proprietor plying about five, six, or seven shillings in respect of what lie has risked his capital on, while the owner of the mineral rights is only contributing his shilling.That may be perfectly true in England but it, is not the case in Scotland, where mining royalties are assessed for local taxation like any other form of income from land. It is an unjust and oppressive tax in any form, as you are singling out a special part of the community for taxation and carrying it by the votes of thousands against hundreds. The very plea for which this tax is imposed—namely, that mining royalties pay nothing to the rates—is absolutely untrue in regard to Scotland, and therefore I hope the Government will give some answer to my Question which will be favourable to the owners of mining royalties in that country.
*THE PAYMASTER-GENERAL (LORD STRACHIE)My Lords, I do not think it is necessary to go further back than the speech which has been referred to by the noble Lord. The noble Lord said that the Mineral Bights Duty was first imposed on the plea of the Chancellor of the Exchequer that owners of mining royalties made no contribution to local rates. I sat through most of those discussions in the other House, but I cannot remendier that statement being made. But as regards this particular point to which the noble Lord takes exception, the Chancellor of the Exchequer did undoubtedly make the statement of which the noble Lord complains. No doubt it was a slip which any man not a Scotsman might make. I might have made the same slip myself as an owner of English royalties, as I do not pay towards local rates on my milling royalties.
It is unnecessary for me to go into the incidence of local taxation in Scotland. I am not sure that I am competent to do so. But it is true, as the noble Lord says, that local rates in Scotland are charged upon royalties or rent paid for a colliery. Though that is so the noble Lord has overlooked this, that the Chancellor of the Exchequer. 307 had his attention drawn to the fact that the royalty owner in Scotland who paid rates was in a worse position than the royalty owner in England, and therefore he introduced into the Finance Act of 1912 a clause which is now Section 11, which provides that—
The amount of rent taken to be the rental value under sections twenty and twenty-one of the Finance (1909–10) Act, 1910, of a right to work minerals (where the right is the subject of a mining lease), or of a mineral way leave shall, in cases where the lessor is liable under any Act to pay any sum on account of rates, be the sum which would be payable as rent if the lessee were liable instead of the lessor.The effect of that is, putting it shortly, that the proprietor, when he has to make his return for assessment of his mining royalty, is allowed to deduct the estimated amount of the local rates from that royalty. Therefore he does not pay upon the full amount of the royalty he receives, but only upon the net amount after deducting the local rates he has had to pay. Consequently he is put in exactly the same position as the English royalty owner or an owner who rents his coal at a fixed rent to a colliery company. So that the position at the moment is this, that the proprietor in Scotland is in no worse position than the royalty owner in England.
§ LORD LAMINGTONI do not quite understand the answer of the noble Lord. Take the case of a mining royalty of the value of £100 a year, on which the local taxes come to £15 a year. The Scottish owner would only pay on £85, I understand?
§ LORD STRACHIEThe noble Lord says £15. If he means that £15 is the proprietor's local rates, and if it was estimated that that amount was the amount the lessee would pay as in England, where the lessee pays the whole of the rates, then that amount would he deducted.
§ LORD LAMINGTONWhat the noble Lord says may be correct, but I cannot quite follow the point. The English royalty owner has never paid the £15 in rates at all.
§ LORD STRACHIEI am sorry if I have not made myself clear. What I was trying to explain was that in the case of the Scottish landlord, supposing the royalty was £100, he would not pay Mineral Rights Duty on the whole of that 308 £100, but only on so much of it after the estimated amount of the rates had been deducted.
§ LORD LAMINGTONMeanwhile the English royalty owner pays nothing at all in rates, and he pays on the £85 as I understand?
§ LORD STRACHIENo. The English royalty owner, I know to my cost, pays on the full amount of his mineral royalties. He pays the duty, less, of course, the Income Tax, which under the decision in the Duke of Beaufort's case he has the right to deduct. The English owner can deduct Income Tax, but nothing else.