Clause 18. — (Declaration as to ss. 43 and 44 of 8 & 9 Geo. 5. c. 40.)

Part of Part II. – in the House of Commons at on 16 June 1921.

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Photo of Mr Frederick Banbury Mr Frederick Banbury , City of London

The hon. Member has put the case so clearly that I do not think it is necessary to say much. But there is one point which he has forgotten, namely, that by Section 133 of the Income Tax Act, 1842, the privilege for which we are contending was allowed to the Income Tax payer up to the year 1907, in which year the right hon. Gentleman the Member for Paisley (Mr. Asquith) repealed that Section, and I at that time opposed it. The only argument the right hon. Gentleman could bring forward— and at that time the Income Tax was 1s. or 1s. 6d., or something of that sort, and Super-tax was non-existent—was that people were beginning to be aware of the existence of this Section and were putting it into operation to the detriment of the Exchequer. That was not a very good argument. Either the Clause was right or it was wrong, and the fact that people were availing themselves of it simply showed that profits were decreasing, and therefore they were naturally anxious to avail themselves of a Clause which enacted that they were not to pay Income Tax on a sum greater than they actually received. I never gave up hope after 1907, and on nearly every occasion I endeavoured to get the Clause re-enacted. In 1915 I succeeded in inducing Mr. McKenna to put these Sections 43 and 44 in. Last year an attempt was made by the then Chancellor of the Exchequer to take them out, and in Committee he did what he thought did take them out of the Bill. Then on the Report stage the hon. Gentleman and myself moved an Amendment and we were defeated. I know my right hon. Friend's defence when we talk about retrospective legislation. He says it is not retrospective because it was the intention of the House to take it out. It was the intention of the Government, and it was backed up by a majority of the House, who probably did not know what they were voting about. But supposing that was so. I will give my right hon. Friend every advantage in the argument. Are they then to say that everyone who thought he was entitled to this advantage is to be penalised because the Government made a mistake? That seems to be a quite untenable proposition.

What ought the Government to do so far as regards the retrospective legislation from their point of view? My right hon. Friend pointed out that there had not been a legal decision. The decision was given by the general Commissioners of the City of London. I do not put them upon the plane of the eminent lawyers who sit around me or on that Bench, but still they are more or less common-sense people and they have some practice and some knowledge in these matters, and I do not think they would give a decision unless they were more or less convinced that it was right. But if my right hon. Friend is so convinced that he is right and they are wrong, why does he want to repeal the decision? Let him go to the courts. He has the Attorney-General. You could not have a better man to present a case, especially if it is a bad case, and therefore why not go to the courts and show that the Government did not make a mistake last year, but did the right thing? The only inference that the common-sense man can draw is that the Government know they are wrong, and that if they went to the courts they would be defeated. Therefore they do what has been the prevailing practice in late years, that when they have made a mistake and they want to alter a decision which has been given against them they come to this House to set aside a judgment of the law. In this case it was not the law. In other cases it has been a decision of the law. That is quite wrong. That deals with the retrospective part.

I come to the part of the Amendment which would enact this for the present year. Is it right that a man who has to pay 6s. in the £ Income Tax and possibly 4s. or even more Super-tax should only be asked to pay on what he gets? Why should he be asked to pay on something which he does not get?