§ 3.38 p.m.
THE DUKE OF DEVONSHIREI should now like, if I may, to make a statement about Ghana pensions. I am glad to inform your Lordships that an agreement has been reached with the Ghana Government which entirely removes for pensioners resident in this country the discriminatory element in the tax imposed by the Ghana Government last October. As a result, the Ghana tax will be at the same effective rate as the pensioner pays on his total income taxable in this country, provided only that this amount of tax is not less than that paid by a resident in Ghana with an income equivalent to the pension.
Because of double taxation relief, this means that the great majority will have no additional tax to pay overall, even if their Ghana pension is their only source of income. In fact, most pensioners, partly because of our own pension supplements, are likely to have some additional income. The Ghana authorities are suspending all tax deductions for the next three months while the detailed application of the new formula is being settled. The adjusted tax will be levied from May onwards.
The Department of Technical Co-operation, in agreement with the Board of Inland Revenue, will send a short statement to all Ghana pensioners resident here explaining how the new formula will work. My right honourable friend the Secretary for Technical Co-operation and my right honourable friend the Secretary of State for Commonwealth Relations are grateful to the Ghana Government for their co-operation in reaching this agreement.
§ EARL ALEXANDER OF HILLSBOROUGHMy Lords, I am much obliged to the noble Duke for making that statement. Progress has obviously been made in this matter for which we are glad, but I am worried about one point. I see that there is to be a suspension of three months while the question of how the new formula is to be applied is gone into. But can we be assured that there will be no holding back of any refundment to the civil servants concerned of deductions already made since last October while all these discussions were going on, and that they will not be taxed twice during that period?
THE DUKE OF DEVONSHIREMy Lords, as the House will appreciate, this is a matter which comes outside my normal responsibilities, but it is something which I also had noticed. I understand that part of the reason for this three-month standby period is to provide time to work it out with those who have already paid this tax, to see that they are not penalised by having done so. I cannot give any categorical answer to the noble Earl this afternoon, but I can say that this is very much in our minds, and we hope to use the interim period to see that no injustice is done.
§ LORD COLYTONMy Lords, may I also thank my noble friend for his statement to-day which many of us welcome very much. I should like to ask one thing: will this double taxation relief arrangement that the noble Lord spoke about mean that at the end of three months' period the pensioners will pay only one tax per month, and will not be called upon to pay both the Ghanaian tax and British tax and then have to wait for a number of months until they are refunded either one or the other?
THE DUKE OF DEVONSHIREMy Lords, as I understand the agreement they will pay just one tax. I am not an expert in taxation, and it is possible that may mislead my noble friend but, as I understand it, that is the case.
§ LORD OGMOREMy Lords, I am not sure that this is going to help the pensioners as much as it appears to do at first sight. Is it a fact that if the Ghana Government have deducted a considerable sum from the pensions the United 495 Kingdom Government will not assess the pensioner for tax until the amount they have overpaid in Ghana has been taken into account? That is the point we want to get clear.
THE DUKE OF DEVONSHIREI think the best thing that I can do, my Lords, is to repeat what I said:
The Ghana authorities are suspending all tax deductions for the next three months while the detailed application of the new formula is being settled.Clearly, what people have paid in tax previously must be taken into consideration in any future settlement. It would seem only just that, if they have paid more than they should have paid, that should be taken into account in what they pay in future.
§ LORD OGMOREMy Lords, I understand the point regarding the Ghana Government. I am talking about Her Majesty's Government. Will Her Majesty's Government take into account any over-payment in Ghana so that these unfortunate people are not assessed here for United Kingdom tax until the overpayment of the Ghana tax is taken into consideration?
THE DUKE OF DEVONSHIREMy Lords, I will undertake to draw the noble Lord's point to the attention of the Treasury, and, for what it is worth, it will have all the support I can give it.