FINANCE BILL. (Hansard, 19 July 1916)

LORD ORANMORE AND BROWNE

My Lords, before this Bill is read a second time I should like to make one or two observations. Even before the passing of the Parliament Act, which deprived your Lordships of control of financial measures, it was customary for remarks on Finance Bills to be confined principally to members on the Front Bench and those other Peers whose financial experience justified their intervening. Therefore it is with great diffidence that I rise to ask the noble Marquess for an explanation on a small, but I think important, clause in the measure that has just been submitted to us. I cannot expect that he will make a declaration of policy on behalf of the Government in this matter, but I think I may press him for some expression of a pious opinion which, if it falls from his lips, would almost have the weight of a declaration of an article of faith.

The special point to which I wish to call attention is contained in Clause 36 of this Bill, which modifies paragraph (b) of subsection (2) of Section 66 of the Finance (1909A–10) Act, 1910, for the purposes of Super-Tax. It is the outcome of a compromise arrived at between the Chancellor of the Exchequer and the representatives of insurance companies and various other parties with reference to deduction of Income Tax from life insurance premiums, 828 the result of which, as I understand, is that, as far as all insurances created before June 22, 1912, are concerned, the full Income Tax may be deducted but Super-Tax will now be charged. The object of this, I believe, is to provide additional money at the present time to carry on the war. I hope that this is the case, and that it does not constitute a reversal of the policy of the Act of 1909–10; and I shall be very glad if the noble Marquess will assure me that this is the case.

I venture to submit that the result could equally well have been arrived at by enacting that the total amount of Income Tax and Super-Tax which might have been deducted should be only 5s. in the £; thus the principle of the Act of 1909–10 would not have been touched. At the time that this Act was passed heavy Death Duties were imposed on all property, more especially on property subject to Super-Tax, and it was recognised by the Government of that day that it was desirable to encourage individuals to provide for the heavy Duties which would eventually fall upon their families by making a concession in the way of a deduction in respect of insurance premiums. Nobody, of course, objects to pay taxes which may be necessary for the successful prosecution of the war, but there are many who would be glad to be assured that this provision is inserted only to meet the present emergency, and that the position of the Super-Tax payer will not be prejudiced, should normal times return and Income Tax be reduced, by this clause which we are asked to pass in the Finance Bill to-day. We are anxious to know that this matter is not a chose jugée, and that in the future, should any suggestion for change be made, we shall not be met by the statement that Parliament in 1916 decided to reverse the policy of the Act of 1909–10 and to remove from the Super-Tax payer the privilege which was granted to him at the time of the passage of the Budget of that year. If the noble Marquess could give any assurance of this kind I am sure it would be gratefully received by a great many people in the country.

THE MARQUESS OF CREWE

My Lords, as the noble Lord on the Cross Benches has pointed out, although it has never been the custom for the Leader of the House in introducing the Finance Bill here, even before the Parliament Act, to make anything in the nature of a Budget speech, yet it has been always the rule to deal with 829 any points raised by any noble Lord interested in the subject; and therefore my noble friend is quite within his rights in asking this question with regard to Clause 36 of the Bill. He also foresaw that it would not be possible for me to make a declaration of policy on this subject. As he has quite truly pointed out, when in the Finance Bill of 1909–10—now an Act—the concession existing with respect to Income Tax was extended to Super-Tax, the sums involved were very different from what they are now. At that time the combined Super-Tax and Income Tax was 1s. 8d.; now Income Tax alone is 5s. Therefore the circumstances are not identical; and it is considered necessary to withdraw this concession as regards Super-Tax in the circumstances which were quite accurately described by my noble friend. As regards the future, it is not possible for me to say anything. I am certainly not prepared to say that the policy indicated by this withdrawal of a concession will be altered in the future; on the other hand, as my noble friend well knows, the Budget is an annual affair, and it will be open to those who think with him that the concession ought to be renewed when the circumstances admit of it, to press their point and to make a representation on a future occasion. It is not possible for me, I am sorry to say, to hold oat any hope to my noble friend that the policy will be reversed in future.