New Clause. — (Extension of relief for earned income.)

Orders of the Day — Finance Bill. – in the House of Commons on 8 July 1924.

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Section sixteen of the Finance Act, 1920 (which deals with allowance in respect of earned income), shall be read as though "one-fifth'' were substituted for "one-tenth." and "six hundred pounds" for "two hundred pounds."—[Mr. Comyns-Care.]

Brought up, and read the First time.

Photo of Mr Arthur Comyns Carr Mr Arthur Comyns Carr , Islington East

I beg to move, "That the Clause be read a Second time."

The object is to restore in part the extent of the relief in favour of earned incomes as against unearned income which was originally granted by the Budget of 1907. The original relief was granted by way of reduction in the rate of tax, instead of by reduction in the amount of assessable income, and the extent of the relief was 25 per cent. The tax at that time was at the rate of 1s. on unearned income and 9d. on earned. That relief was afterwards increased in 1910 when, the rate on unearned income was increased to 1s. 2d., while the rate on earned income remained at 9d. The Finance Act of 1920 introduced a new system by allowing relief by way of deduction from the amount of assessable income instead of by way of reduction in the rate of tax, and the rate of relief was reduced to 10 per cent. In my submission that was a retrograde step which should be retraced. I have not suggested the full amount of the relief originally granted in 1907, but, I would restore it to 20 per cent., and the other part of the Amendment proposes to extend the total amount which may be deducted from the assessable income under this head from £200 to £600. It will be clear that I am not in a position to put forward the whole of the proposals which I really wish to put forward, because the other part of it would be out of order. For that reason I do not wish to press this Amendment to a Division. I wish to make it clear that I do not wish to relieve one section of Income Taxpayers at the expense of other taxpayers. What I am proposing is not relief of the Income Taxpaying class at the expense of the indirect taxpaying class but a readjustment of the burden of taxation as between Income payers themselves. Therefore, in saying that I am advocating an extension of relief to earned income, I mean that I am advocating an extension of relief at the expense of unearned. What I propose is that as between a man earning any particular income up to £3,000, if it is earned, there should be relief from taxation to the extent of 20 per cent., as against a man who receives the same amount of income but does not earn it. As I am not in a position to move the necessary proposals for raising the revenue which would be sacrificed by this Amendment, I do not propose to press it, but I would ask the Chancellor of the Exchequer to reconsider the matter if be should be in a position to deal with it in another year, so as to restore something like the extent of the relief that used to be given to earned income. In my view, the recommendations of the Royal Commission on Income Tax were of a retrograde character in this respect.

Photo of Mr Philip Snowden Mr Philip Snowden , Colne Valley

I make no complaint that the hon. and learned Member has taken advantage of the opportunity to raise this question. I quite agree with him that the House is not compelled to regard the recommendations of the Royal Commission on Income Tax as sacrosanct. Members who were present in the earlier part of the discussion may remember that I said that there were a good many possible minor improvements and readjustments in the Income Tax law which must be accepted. But I think it would be a mistake to begin to pick out one here and there and to adopt them without relation to all the other possible adjustments. I said then that I thought some Chancellor of the Exchequer in the not very distant future would be compelled to review the reforms incorporated in the Finance Act, 1920, on the recommendation of the Royal Commission. When the time comes for doing that, I am certain that the present relations between earned and unearned income will be one of the points dealt with.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 69; Noes, 187.

Division No. 142.]AYES.[3.34 a.m.
Balfour, George (Hampstead)Hannon, Patrick Joseph HenryRaine, W.
Barnston, Major Sir HarryHarland, A.Rhys, Hon. C. A. U.
Birchall, Major J. DearmanHarmsworth, Hon. E. C. (Kent)Richardson, Lt.-Col. Sir P. (Chertsey)
Bird, Sir R. B. (Wolverhampton, W.)Hartington, Marquess ofRoberts, Samuel (Hereford, Hereford)
Blades, Sir George RowlandHarvey, C. M. B. (Aberd'n & Kincardne)Ropner, Major L.
Blundell, F. N.Hennessy, Major J. R. G.Roundell, Colonel R. F.
Bowyer, Capt. G. E. W.Herbert, Dennis (Hertford, Watford)Russell, Alexander West (Tynemouth)
Brittain, Sir HarryHughes, CollingwoodSamuel, A. M. (Surrey, Farnham)
Burman, J. B.Kedward, R. M.Sandeman. A. Stewart
Chadwick, Sir Robert BurtonKeens, T.Sheffield, Sir Berkeley
Cope, Major WilliamKindersley, Major G. M.Shepperson, E. W.
Courthope, Lieut.-Col. George L.King, Capt. Henry DouglasSmith-Carington, Neville W.
Crooke, J. Smedley (Deritend)Lumley, L. R.Spero, Dr. G. E.
Curzon, Captain ViscountMaitland, Sir Arthur D. Steel.Steel, Samuel Strang
Dalkeith, Earl ofMilne, J. S. WardlawTitchfield, Major the Marquess of
Dawson, Sir PhilipMoore-Brabazon, Lieut.-Col. J. T. CWarrender, Sir Victor
Dixey, A. C.Nicholson, O. (Westminster)Wells, S. R.
Eden, Captain AnthonyNield, Rt. Hon. Sir HerbertWilliams, A. (York, W. R., Sowerby)
Ferguson, H.O'Neill, Rt. Hon. HughWilson, Sir C. H. (Leeds, Central)
Gaunt, Rear-Admiral Sir Guy R.Penny, Frederick GeorgeWise, Sir Fredric
Greene, W. P. CrawfordPerkins, Colonel E. K.Yerburgh, Major Robert D. T.
Greenwood, William (Stockport)Philipson, Mabel
Hacking, Captain Douglas H.Pielou, D. P.TELLERS FOR THE AYES.—
Hall, Lieut.-Col. Sir F. (Dulwich)Pownall, Lieut.-Colonel AsshetonMr. Remer and Mr. Storry-Deans.
Ackroyd, T. R.Gillett, George M.Law, A.
Adamson, Rt. Hon. WilliamGorman, WilliamLawson, John James
Adamson, W. M. (Staff., Cannock)Gosling, HarryLeach, W.
Alexander, A. V. (Sheffield, Hillsbro')Gould, Frederick (Somerset, Frome)Lee, F.
Ammon, Charles GeorgeGraham, W. (Edinburgh, Central)Linfield. F. C.
Aske, Sir Robert WilliamGreenwood, A. (Nelson and Colne)Loverseed, J. F.
Attlee, Major Clement R.Grenfell, D. R. (Glamorgan)Lunn, William
Baker, WalterGrundy, T. W.McEntee, V. L.
Banton, G.Guest, Dr. L. Haden (Southwark, N.)Mackinder, W.
Barclay, R. NotonHall, F. (York, W.R., Normanton)Maclean, Nell (Glasgow, Govan)
Barnes, A.Hall, G. H. (Merthyr Tydvil)Makins, Brigadier-General E.
Batey, JosephHardie. George D.Mansel, Sir Courtenay
Birkett, W. N.Hartshorn, Rt. Hon. VernonMarch, S.
Bonwick, A.Harvey, T. E. (Dewsbury)Marley, James
Briant, FrankHaycock, A. W.Martin, F. (Aberdeen & Kinc'dine, E.)
Broad, F. A.Hayday, ArthurMartin, W. H. (Dumbarton)
Bromfield, WilliamHenderson, A. (Cardiff, South)Middleton, G.
Brown, A. E. (Warwick, Rugby)Henderson, T. (Glasgow)Mills, J. E.
Brown. James (Ayr and Bute)Henderson, W. W. (Middlesex, Enfld.)Mond, H.
Buckle, J.Hillary, A. E.Morris, R. H.
Charleton, H. C.Hindle, F.Morrison, Herbert (Hackney, South)
Clarke, A.Hirst, G. H.Morrison, R. C. (Tottenham, N.)
Clayton, G. C.Hobhouse, A. L.Morrison Bell, Major Sir A.C. (Honiton)
Climie, R.Hodges, FrankMorse, W. E.
Collins, Sir Godfrey (Greenock)Hoffman, P. C.Mosley, Oswald
Compton, JosephHoward, Hn. D.(Cumberland, North.)Moulton, Major Fletcher
Costeilo, L. W. J.Howard, Hon. G. (Bedford, Luton)Murray, Robert
Cove, W. G.Hudson, J. H.Murrell, Frank
Cowan, D. M. (Scottish Universities)Isaacs, G. A.Newman, Sir R. H. S. D. L. (Exeter)
Crittall, V. G.Jackson, R. F. (Ipswich)Nixon, H.
Darbishire, C. W.Jenkins, W. (Glamorgan, Neath)Oliver, P M. (Manchester, Blackley)
Davies, David (Montgomery)Jenkins, W. A. (Brecon and Radnor)Owen, Major G.
Davies, Rhys John (Westhoughton)John, William (Rhondda, West)Paling, W.
Dickie, Captain J. P.Johnstone, Harcourt (Willesden, East)Palmer, E. T.
Dickson, T.Jones, C. Sydney (Liverpool, W. Derby)Parkinson, John Allen (Wigan)
Dodds, S. R.Jones, Henry Haydn (Merioneth)Pattinson, S. (Horncastle)
Duckworth, JohnJones, J. J. (West Ham, Slivertown)Perry, S. F.
Dukes, C.Jones, Rt. Hon. Leif (Camborne)Pethick-Lawrence, F. W.
Duncan, C.Jones, Morgan (Caerphilly)Phillipps, Vivian
Edwards, G. (Norfolk, Southern)Jones, T. I. Mardy (Pontypridd)Potts, John S.
Egan, W. H.Jowitt, W. A. (The Hartlepools)Purcell, A. A.
England, Colonel A.Kay, Sir R. NewbaldRaffely, F. W.
Falconer, J.Kennedy, T.Rathbone, Hugh R.
Gardner, B. W. (West Ham, Upton)Kirkwood, D.Rea, W. Russell
Gates, PercyLamb, J. Q.Rees, Sir Beddoe
George, Major G. L. (Pembroke)Lansbury, GeorgeRichards, R.
Gibbins, JosephLaverack, F. J.Richardson, R. (Houghton-le-Spring)
Romeril, H. G.Sturrock, J. LengWilliams, Dr. J. H. (Llanelly)
Royle, C.Sunlight, J.Williams, Col. P. (Middlesbrough, E.)
Savery, S. S.Tattersall, J. L.Williams, Lt.-Col. T.S.B. (Kenningtn.)
Scurr, JohnTerrington, LadyWilliams, Maj. A.S. (Kent. Sevenoaks)
Seely, H. M. (Norfolk, Eastern)Thomson, Trevelyan (Middlesbro, W.)Williams, T. (York, Don Valley)
Sexton, JamesThornton, Maxwell R.Willison, H.
Sherwood, George HenryThurtle, E.Wilson, C. H. (Sheffield, Attercliffe)
Short, Alfred (Wednesbury)Toole, J.Wilson, R. J. (Jarrow)
Smith, Ben (Bermondsey, Rotherhithe)Tout, W. J.Windsor, Walter
Smith, W. R. (Norwich)Vivian, H.Windsor-Clive, Lieut.-Colonel George
Snell, HarryWallhead, Richard C.Wright, W.
Snowden, Rt. Hon. PhilipWard, G. (Leicester, Bosworth)Young, Andrew (Glasgow, Partick)
Spence, R.Watson, W. M. (Dunfermline)
Spoor, B. G.Watts-Morgan, Lt.-Col. D. (Rhondda)TELLERS FOR THE NOES.—
Stamford, T. W.Wedgwood, Col. Rt. Hon. Josiah C.Mr. Warne and Mr. John
Starmer, Sir CharlesWhiteley, W.Robertson.
Stranger, Innes HaroldWilliams, David (Swansea, E.)