§ Order of the Day for the Second Reading read.164
§ THE SECRETARY OF STATE FOR INDIA AND BURMA (THE MARQUESS OF ZETLAND)
My Lords, this is a Bill consisting of some 16 clauses which effect a miscellaneous assortment of Amendments in the Government of India and the Government of Burma Acts, 1935, together with a printing clause, the effect of which will be to ensure, in the event of this Bill becoming law, that the Amendments made in the original Acts will be incorporated in the texts of the Acts in any future official issues of them that may be made. The greater number of the clauses of this Bill have already been assented to by your Lordships, since they appeared in the India and Burma (Miscellaneous Amendments) Bill which passed through all its stages in your Lordships' House last Session but, owing to lack of time and opportunity, made little progress in another place. I should perhaps, therefore, confine myself to explaining to your Lordships the extent to which the present Bill differs from the previous Bill to which your Lordships gave your assent.
Three of the clauses which were included in the previous Bill find no place in the present one. The reason for that, as regards two of them which sought to give the Central Government certain powers of co-ordination over the activities of the Provincial Governments in the event of war, is that they were actually dealt with by Parliament as an emergency measure and became law shortly after the outbreak of war. The other clause which no longer finds a place in this Bill was designed to give the Federal Government the power of imposing countervailing duties against a unit of the Federation in order to counteract discriminatory action, should that be proposed by a unit itself to the disadvantage of the Federation at large. But since, owing to the outbreak of the war, our negotiations for bringing the federal provisions of the Act of 1935 into operation have been temporarily suspended, there is no present need for such a provision. As against these three omissions there are four additions to the present Bill—namely Clauses 2, 4, 15 and 16, two of which amend the Government of India Act and the other two the Government of Burma Act.
Of the two clauses amending the Government of Burma Act, Clause 15 in 165 the present Bill will, in effect, make possible the Amendment of an Order in Council affecting the financial settlement between India and Burma. Now that the final balance sheet of assets and liabilities of the two countries is in sight, it is necessary to make some adjustment in the provisional allocation of assets and liabilities which was made by the Order in Council. But, owing to an oversight, it is found that it is not possible under the text of the Government of Burma Act, as it at present exists, to bring in an Order in Council superseding that which is already in existence, and the whole purpose of this Amendment is to make it possible to bring in an Order to supersede that which is now out of date. Then the other Amendment to the Government of Burma Act is effected by Clause 16 of the present Bill, and the effect of that clause will be to enable the Burma Legislature to make provision to apply, with such modifications as may be necessary, the provisions of the Naval Discipline Act, to naval forces raised in Burma. The need for this provision has arisen as a result of a decision to raise in Burma a Naval Volunteer Force for the local defence of the approaches to Rangoon. So much, then, for the Amendments of the Government of Burma Act.
I now turn to the two new Amendments to the Government of India Act. Of these, Clause 4 merely corrects an oversight in the original Act in connection with the issue by the Governor of Ordinances made on the advice of his Ministers. By some oversight these Ordinances do not stand in precisely the same position as Ordinances issued by the Governor in his discretion or as Acts of the Legislatures or as Governors' Acts, and the purpose of this Amendment is really to rectify that omission and to place these Ordinances on the same footing as the others. Then, finally, I come to Clause 2 of the Bill, which is of rather more than merely technical interest and importance. The purpose of it is to place beyond dispute the distinction which it was always intended should be drawn between taxes on income, on the one hand, and taxes on professions, trades, callings, and employments on the other. Taxes on income, other than agricultural income, are a Federal source of revenue, whereas taxes on professions, trades, callings, and employments are a Provincial source of revenue. It was never intended, 166 of course, that taxes under these Provincial heads should be so imposed as to constitute an Income Tax and so trespass upon the Central field of revenue.
Indeed, the main purpose in view, when these headings were included in the Provisional list, was to keep alive the right which Provincial Governments had exercised in the past of empowering local authorities such as municipalities and district boards to levy rates for local purposes which were commonly described as taxes on professions and taxes on circumstances and property. It was, of course, a characteristic of these taxes that their incidence upon the individual taxpayer was a very small one. Experience has shown, however, that it is possible to levy taxes under these heads which are, in fact, nothing less than Income Taxes in disguise. Some little time ago the Legislature of the United Provinces enacted a taxing Bill under the heading of an Employment Tax which was, in fact, nothing less than an Income Tax. It would have imposed on the incomes concerned of all those who derive their income from employment a substantially graduated tax which, in respect Of a large part of the incomes concerned, would have amounted to as much as 10 per cent. It is quite clear that this would have constituted a serious invasion of one of the more important sources of revenue which had been assigned to the Federal Government, and it is equally clear that if it were to be permitted on a large scale it would have the effect of seriously upsetting the balance between the Federal and the Provincial field of taxation.
The effect of Clause 2 will therefore be, by limiting the amount which may be levied on any one individual in any one year under the heading of a tax upon professions, trades, callings, or employments to a specified sum, which in the Bill is placed at 50 rupees, to restrict the tax imposed to the character which it originally possessed and from which it was never intended it should depart. Perhaps I might add that while Clause 2 of the Bill thus protects the Central sources of revenue against invasion by the Provinces, Clause 3 performs a similar service to the Provinces against the Centre, for it secures to the Provincial Governments the taxes on motor vehicles and also upon the sale and consumption of 167 electricity which there was some danger of the Central Government regarding as an Excise and therefore claiming as a source of Central revenue. That is, perhaps, all I need say. Apart from these four clauses and the purposes which I have endeavoured to explain, the Bill is the same which met with your Lordships' approval last Session. For the most part it deals with purely technical points, and may be said to be wholly non-controversial. I beg to move that the Bill he now read a second time.
§ Moved, That the Bill be now read 2ª.—(The Marquess of Zetland.)
§ 3.46 p.m.
§ THE MARQUESS OF SALISBURY
My Lords, I am sure your Lordships are very much obliged to my noble friend the Secretary of State for his explanation of the terms of this Bill. I do not rise to call in question the merits of it in any respect. I rise merely for the purpose of making a suggestion to the Government. There may be some difficulty as far as the draftsmen at the present time are concerned, but in ordinary times it has generally been the practice in these Bills for your Lordships to have a small page at the beginning indicating the general scope of the provisions of the Bill so as to help members of this House, and indeed members of another place, to find their way through a Bill which carries the practice of legislation by reference to a very great length.
I make no complaint of it, but it would have been very easy to have had a little page saying that this Bill resembled in every respect the Bill passed by your Lordships in a previous Session except in these four clauses. Then members of the House who take an interest in the subject would have been able to devote their attention to these four clauses and would have saved themselves a good deal of time. Perhaps a word or two as well might have been added embodying part of the very clear explanation given by the Secretary of State in respect of Clause 2. Clause 2 appears to be the only clause in which there is an important modification which was not included in the Bill of last Session. I do not know whether my respectful suggestion to the Secretary of State might be considered, but I recognise that the draftsmen have been put to very great pains at the 168 present time with emergency legislation arising from the war. It may be for that reason that the practice which was gradually growing—a good practice—in the printing of Bills has, for the moment, been omitted. I hope I may be forgiven for making that suggestion.
§ 3.49 p.m.
§ LORD SNELL
My Lords, the Bill which the noble Marquess has moved is one of great technicality and difficulty, and I shall not, myself, take the responsibility of offering any opposition to it. So far as I understand it, the main part of the Bill has already received your Lordships' assent in another Session, and the purpose of the present Bill would seem to be mostly to secure a closer definition of the relationships which are to exist between the Provincial and the Central powers in India. I am presuming that these requirements have arisen out of the practical experience of the last few years and the need for securing smoother working of the great Act of 1935. I do not like to leave the subject of India, though I am afraid it is not within the scope of this Bill, without expressing a wish that it had been possible for the noble Marquess to have said something about the present general position there. Parliament will shortly rise for the Recess, and it would have been a comfort and an assurance to us all had he been able to have expressed any greater hope than that the working of the Constitution was temporarily suspended. However, I may not raise that to-day, but I do hope that before Parliament adjourns the noble Marquess may feel it possible to say a word on the general situation.
§ 3.52 p.m.
§ THE MARQUESS OF ZETLAND
My Lords, I rise first of all to say to the noble Marquess that I fully appreciate the advantage of the course which he suggested, and I regret very much that it was not followed. It arose in this way. With the original Bill I did issue a White Paper. It was a fairly long White Paper, and I did consider whether I should be justified in re-issuing a similar White Paper for this Bill, which included only four new short clauses. I thought, in view of the burden which at present rests upon the Parliamentary draftsmen, to which the noble Marquess himself referred, and from the point of view of expense also, that perhaps I should 169 hardly be justified in doing that; but I quite agree it would have been better if I had had a short paragraph drafted just to explain what the four new clauses were. With regard to what the noble Lord opposite has said, as he realises this is not quite the appropriate occasion on which to speak of the general position in India, but, of course, if before Parliament rises the noble Lord is desirous of having such further information as I may possess with regard to that, I shall be only too happy to give him what information I can.
§ On Question, Bill read 2ª, and committed to a Committee of the Whole House.