Clause 13. — (Super-tax for 1925–26.)

Orders of the Day — Finance Bill. – in the House of Commons on 15th June 1925.

Alert me about debates like this

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I do not propose to select any of the Amendments that appear on the Order Paper to this Clause. The Question therefore is "That the Clause stand part of the Bill."

Captain BENN:

May I put to you, Sir, the difficulty in which many of us find ourselves. Those of us who are opposed to these reductions in the Super-tax are left with the alternative of abolishing the tax altogether, or supporting the reduction. Some of the Amendments, particularly one to which my name is attached, are specially designed to give us an opportunity of casting a logical vote against the reductions in Super-tax. If none of the Amendments be selected, we shall either have to give a vote the result of which would be to abolish the Super-tax altogether, or else we shall have no opportunity of voting.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

It is not customary to give the Chairman's reasons for selecting Amendments. If the hon. and gallant Gentleman would like to know the particular reason in the case of the Amendment in which he is interested, it is that it would not be in order. If it were accepted by the Committee, it would impose a charge, which is not in order.

Captain BENN:

I take it that the only course for hon. Members who wish to oppose the reductions in Super-tax is to vote against the Clause.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Photo of Mr Arthur Greenwood Mr Arthur Greenwood , Nelson and Colne

I rise to express the opposition of this side of the House to the remission of the Super-tax. We have reached in this Clause what many of us regard as the most iniquitous Clause in an iniquitous Budget. All the arguments which have been adduced against the remission of Income Tax apply with much greater force to the reduction which has been given by the Chancellor of the Exchequer to Super-taxpayers. Of all classes in the community who need relief, clearly those who need it least are those who are best off. The richer people are, apparently the more they are assisted. Not only are the Super-tax payers to enjoy the full benefit of the 6d. remission, in common with all other Income Tax payers, but they are in addition to receive a special dole of £10,000,000 a year. Yet if we take those in the higher reaches of Super-tax payers—those people with £5,000 a year or more—within the last 10 years their money income has doubled. According to the official figures for the year before the war, the total incomes of those with incomes of £5,000 a year or over was about £175,000,000. I estimate that at present the total income of people with over £5,000 per year is over £340,000,000. That means that their money incomes have doubled. The Chancellor of the Exchequer on an earlier Clause referred to the diminished purchasing power of money. The truth is, that, even if you take into account the increase that has taken place in prices during the last 10 years, the people who are in enjoyment of incomes of £5,000 a year or more are better off than they were 10 years ago. In the case of the people with £2,000 a year, their numbers have increased in the last four years, during a period of serious trade depression and during a period of falling prices. Their total income to-day is much what it was four or five years ago. Prices have fallen, but the people who are paying Super-tax on £2,000 a year or more, speaking generally, are better oft than they were during the trade boom. There may be individuals here and there who have lost some portions of their incomes, but the facts are indisputable that the rich are as well off as, and in many cases better off than, they were before the Great War.

The Chancellor of the Exchequer has referred to wages. It is true that what he calls wages, meaning weekly wage rates for the normal working week, are to-day about 70 per cent. above what they were in 1914, but prices are about 80 per cent. above what they were in 1914. Therefore, taking the whole of labour, the real wages to-day are less than they were 10 years ago. For the information of the Chancellor of the Exchequer and the Financial Secretary to the Treasury, let me say that from 1895 onwards there had been a rise in prices which swallowed up increases in wages, and the level of real wages in 1914 stood at the same level that it did in 1895. To-day, the wages of labour, broadly speaking, are lower than they were 30 years ago, while the rich are richer, even if you take into account the rise in the cost of living.

The national income to-day, the total production which is the national income, is pretty much what it was in 1914. There has been an increase of population, which means that the national income per head is not quite so much as it was then, but the national income is much as it was 10 years ago. The proportion which labour is getting, when working full time, is less than it was 10 years ago, and you have to make this further allowance that 10 per cent. of the people are unemployed. That means that, for the time being, the share that labour is getting of the national income is down, while the proportion that is left for those who are better to do has risen. There is no relief in this Budget for the large mass of workers who to-day are suffering from low wages. There is a dole of £10,000,000 a year to those who can well afford to do without it. The Chancellor of the Exchequer, in pleading specially for Super-tax payers when referring to the importance of remitting direct taxation as a stimulus for industry, went on to say: I believe that a moderate diminution of the burden upon wealth in the process of creation, even if that burden is to be transferred to accumulated capital passing at death, will tend to relieve the pressure upon the highly-creative faculties of the community. Such a change is in accordance with modern conceptions, and I believe that within these limits and at this particular juncture, having regard to the special circumstances of our industrial situation and the lack of drive there seems to be in so many quarters, it will be attended by definitely recuperative symptoms." [OFFICIAL REPORT, 28th April, 1925; cols. 85–86, Vol. 183.] It has been pointed out and has not been disproved that this expedient of relieving the well-to-do has not done anything to restore trade. It is not the slightest use dealing with particular years and then saying that on one particular day there were 2,000,000 unemployed and to-day there are only 1,250,000 unemployed. That is partly due to lower wages and it is partly due to the fall in the cost of materials. It cannot be attributed to the relief which has been given to the well-to-do. Since 1922–3 the well-to-do Income Tax payers and Super-tax payers have received as relief from Income Tax £200,000,000. That ought to have fructified industry, but its effect has been negligible, and I challenge anyone to prove any connection whatever between the state of unemployment to-day and the remission of Income Tax or Super-tax.

The Chancellor of the Exchequer referred to the highly-creative faculties of the community. Will they respond to the right hon. Gentleman's national call by this remission of Super-tax? Let us take the case of the men with £2,500 a year. They are to receive what is virtually a cheque from the Chancellor of the Exchequer of £18 15s. a year to correct the "lack of drive," and to lead the "highly-creative faculties" to do what they have always done, and what they have always been paid to do. That is not a compliment to them. I suggest that these great minds who need the stimulus of £18 15s. a year to come to the aid of the nation in its hour of trial are not worth the bribe, if that is the price we have to pay to get a response from them. The man with £3,000 a year will be given a cheque by the Chancellor of the Exchequer of £43 15s. Everybody with £5,000 a year or more will receive a gift from the Chancellor of the Exchequer of £131 5s. Is the £5,000 a year employer going to call a meeting of his board and say, "I have to-day received from a grateful Chancellor of the Exchequer a cheque for £131 5s., which I wish to use to stimulate industry." Certainly he will not. There will be many other calls upon him. There will be the calls of home, the calls of more extravagance, the calls of longer holidays. It may be that a fraction of the money will go to fructify industry, but is there anyone who will suggest that, notwithstanding the very substantial bribe, the £5,000 a year people are going to put this money into industry in order that industry may be stimulated? It is not so. Only a fraction of it will go in that direction. The great need to-day is not for an enormous addition to the capital of the country. It is admitted that new capital is necessary and essential, but there are greater needs to-day than new capital in industry. The great need is for a little more scientific application and a little more real initiative on the part of our captains of industry. That would do immensely more than a bribe of this kind.

I wonder whether hon. and right hon. Gentlemen opposite have considered the value of the gift that is going to be made to the Super-tax payer, expressed in terms of pensions. The man with £2,500 a year, receiving his annual dole of £18 15s., is going to receive the equivalent of an orphan's allowance under the Ministry of Health Bill. The man with £3,000 a year will be able to make merry with his gift of £43 15s., which is about sufficient to pay for the pension and allowances of a widow with two children. The 25,000 people in this country with £5,000 a year or more are going to receive as a subsidy 50s. a week, which is more than many skilled men get to-day and is the equivalent of the pension of five widows. Twenty-five thousand rich men with £5,000 a year or more, in the midst of their plenty, are going to be handed over by the Chancellor of the Exchequer the equivalent of the pensions of 125,000 widows. The Chancellor of the Exchequer is giving to the 89,000 people who pay Super-tax as much in one year as he proposes out of the Exchequer to give in contributions towards widows' and orphans' pensions in 2½ years. For the money with which to provide the pensions he is going to search the pockets of the poor, and he is going to get from their pockets every year the precise amount that he is putting into the pockets of the 89,000 rich people.

8.0 P.M

The proposal to reduce Super-tax plus Income Tax is supported neither by economic theory nor by practical experience. It is a dole of the most abominable kind—a scandalous abuse of the power of Government to hand out £10,000,000 a year to a relatively small number of 89,000 people, when there are 14 times as many walking the streets, workless, and when there is to be a pensions scheme that cannot be financed except by taking out of industry, through the payments of the employers and the workers, twice as much every year as the Chancellor of the Exchequer proposes to give to the payers of Super-tax. So long as we are wasting £150,000,000 a year in England and Wales through disease alone, which is largely preventable, the right hon. Gentleman has no business to give doles to the rich. That £10,000,000 a year, devoted to the development of public health services would be immensely fruitful. We should get returns 100 fold in health, in efficiency, in productivity. That £10,000,000 a year, filtering into the pockets of the rich, a large amount of it being squandered and wasted and spent not with any productive object in view, is a gift of a most scandalous kind. If hon. and right hon. Gentlemen opposite will but consider what might have been done with that £10,000,000, they will have Very uneasy consciences when they get their cheques from the Chancellor of the Exchequer. I hope that the Committee, whatever it may feel about Income Tax, will realise that, in his zeal to help those who help him, the Chancellor of the Exchequer has gone a little too far, and if he would earn some commendation from large masses of people outside, he might do it by using some of this £10,000,000 in a way in which it would be of benefit not to private investors but to the public at large.

Photo of Mr David Reid Mr David Reid , Down

The hon. Gentleman who has just sat down talks of a dole being given by the Chancellor of the Exchequer to those who will benefit by the proposed remission of Income Tax. The Chancellor of the Exchequer is giving nothing to these people. He is levying a certain amount from them, and to talk about a dole in such circumstances is an absolutely unjustifiable use of language.

Photo of Mr Arthur Greenwood Mr Arthur Greenwood , Nelson and Colne

It is a far more justifiable use of the word than in the case of those who receive unemployment benefit.

Photo of Mr David Reid Mr David Reid , Down

The hon. Gentleman spoke of practical considerations. To judge from the speeches which I have heard from the Labour benches to-day—and I have heard nearly every one of them—hon. Members opposite do not show any practical acquaintance with what happens in actual business. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) spoke of the danger of raising the Income Tax to such a high pitch as to lead to evasion and avoidance. The Financial Secretary to the Treasury in his speech in the Debate on the Budget said that the Super-tax payer was displaying incipient signs of sore back. To anyone acquainted with what has been happening in the last few years the only wonder is that the Super-tax payer has not shown these signs much sooner. I have seen something of these people's affairs, and I made such inquiry as I could among solicitors, barristers and others, and it is safe to say that a very large proportion of Super-tax is now paid and has been paid out of capital. It is clear that if you pay tax out of capital year after year the amount of income on which tax can be paid must be less, and the State is bound to lose in this way, and it is bound to lose later on when Death Duties have to be paid, because the amount of the Death Duties must then be less.

We may say that it is wrong to pay taxes out of capital, but if a tax is levied on a man he can meet it from whatever source he wishes, and there are many people who are unable to pay the tax out of their income. The result of the War was to impose heavy taxes. A man who before the War was spending little more than half his income, and investing all the rest, found, when Income Tax and Super-tax were imposed at war rates, that practically the whole of his savings were wiped out, with the result that he had to some extent to live on his capital. It is extremely difficult at short notice for a man to alter his whole style of living, when extra taxation is imposed, without resorting to capital expenditure. If a man goes to another house, to reduce his expenditure, he has to have capital expenditure of some sort. It cannot be said that the Income Tax and Super-tax payer is in any way in default in doing what he has done, but the fact remains that a large part of his tax is paid out of capital, and, therefore, I welcome this reduction, because it will help to make easier the payment of the tax in future years.

We have heard from the Labour Benches to-day that a reduction in the Income Tax and Super-tax did nothing to stimulate industry. The hon. Member who spoke last talked about the Super-tax payer getting a cheque for an amount which he did not put into industry. Such a conception of the way in which money is used is simply puerile. No one on this side suggests that that is the way in which the reduction of Super-tax and Income Tax go to stimulate industry. But I have seen people who are in business, when considering the question of investing money in business put down as one of the reductions from their possible profits what they will have to pay in Income Tax and Super-tax. People who invest their money in business do so in order to make money. Nearly every enterprise involves some risk, and people have to see some possible profit before they will take the risk which has to be taken.

In considering this a man does not look at the gross figure of, say, 10 per cent. profit which he is likely to receive. He will consider what is going to be the net result, and on numerous occasions I have seen things which looked as if they would be profitable turned down, because those concerned said that the net profit would not be commensurate with the risk which would have to be run. In that way these high taxes destroy the spirit of enterprise. The hon. Member said that there were as many people unemployed now as there were before. But if you are going to maintain your population you must have enterprise in industry. You must expand, and to encourage people to expand there must be an inducement. It is not a question of giving £100 to a man here and there, or anything of that kind, but it is a question of getting rid of the factors which keep people from investing in enterprise for the benefit of the nation. I hope that the Chancellor of the Exchequer will stick to his original pro- posals, which I believe to be for the advantage of the country generally.


I rise to support this Clause. My opinion, I believe, is not widespread on these benches—it might be described as a local eccentricity. I think that the two last speeches have shown in a most interesting manner how it is possible to advance on this Clause the same arguments, both for and against, that were advanced on the last. I do not intend to repeat these arguments. I only turn to a single point in relation to the Super-tax payer, as a particular class of taxpayer, and his equities.

The hon. Member who opposed this Clause took an attitude as regards the Super-tax payer which is very common and very dangerous. The poor Super-tax payer never gets any sympathy. It is only too fatally easy to hold him up, as most people do, as one who is too well-off, anyhow, and who deserves no sympathy. He may deserve no sympathy on the ground of his income, but, nevertheless, any class of taxpayer is entitled to sympathy when he does not get equity. I believe that it is possible to show that in the course of the last four or five years the Super-tax payer has not had equity under our system of taxation. That is a matter which we cannot afford to disregard. It is not a question of the interests of this particular class of taxpayer, but it is of vital interest to the whole country that our system of taxation should not be unfair to any class of taxpayer, because the efficiency of our whole system of taxation depends upon the conviction in the minds of the taxpayer that it is fairly worked, and if you create a suspicion in the mind of the ordinary taxpayer that the system is not being fairly worked, even as regards a class of taxpayer very remote from himself, you make him think that perhaps he may be the next person who will suffer from inequity, and you no longer get his moral support for your system of taxation. I do not believe, even in the case of the despised class of Super-tax payer, that it is anything but necessary to preserve this principle.

I myself strongly support a strict graduation of Income Tax, I should even be prepared to consider at the right time and in the right way a steeper graduation than you have at present. But if you are going to steepen the graduation of the Income Tax you ought to do it as a matter of deliberate policy after the most careful consideration. It would be unfair to do so at the present time, and for this reason. It is a commonplace of taxation that Income Tax and Super-tax are really but two aspects of a single tax. It is wrong to look upon them as separate taxes paid by different classes of taxpayers. They are but two branches, divisions, which affect a single scheme of graduation running from a fraction of a £ up to a maximum rate. That is the scientific aspect, if I may say so, of the true nature of Income Tax and Super-tax taken together, two branches of one tax imposed in a single scheme of graduation. What have we been doing about our scheme of graduation? Ever since 1920 we have been reducing down the basic rates of Income Tax—from 6s. to 4s. During that time we have made no reduction in the rates of Super-tax. The effect of that of course has been very shortly to steepen the graduation of the Income Tax. In the period when we have been reducing the total burden of the Income Tax we have steepened the graduation. Is that right?

I believe that there is a settled principle of taxation which shows that that is wrong. The principle is this: that at the time you are making the reduction in the total burden of the tax, you ought not to change the graduation, for the simple reason that the people who have borne the burden before the reduction should receive the relief of the reduction in the same proportion as they have borne the burden, and if you change the graduation while you reduce the burden, you give the relief in other quarters. I should say it was a sound principle of taxation that, whether you are going to steepen the graduation or whether you are going to flatten it, you should do so at a time at which you are not changing the basic rate and total burden of the tax. See how strongly and how sharply that applies to aggravate the position of the Super-tax payer in the last four years. During the War the whole burden of the Income Tax was sharply increased by the increase of the basic rate. During that time there was no great change in the graduation. But since the War, during the period of the reduction, you have been making the graduation steeper and steeper while giving no remission to Super-tax. The consequence is that the people who bore the burden and heat of the day while the rate and the burden of Income Tax was being increased, have not been the people to receive relief in the same proportion.

I do not see how that is consistent with equity. It is most inequitable. You ought to have given relief to Super-tax payers at the same rate as to Income Tax payers. There has been an accumulating grievance on the part of the Super-tax payers during the last four years. It has by no means been removed. In the proposals now before the Committee the arrears, as it were, of relief in the rates of Super-tax are by no means made good. If there is anything in what I have said, if I have stated fairly and truly the principle of equity in taxation, the proposal made by the Chancellor of the Exchequer in this Finance Bill is a proposal in the right direction. This relief which he is giving this year he proposes to give more fairly as regards the people who have been bearing the burden before, by reducing the rates of Super-tax at the same time as he reduces the basic rate of Income Tax. Disregarded as the claims of the Super-tax payer constantly are—more perhaps on the public platform than in this House—nevertheless I urge most earnestly those who hesitate about this tax to consider the broad outlook as regards the fairness of taxation, and to ask themselves whether, as regards even this most despised class of taxpayer, it is safe to continue to inflict year by year what must appear to a not unimportant class of taxpayers to be in the nature of an inequity.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

I have listened with considerable interest to the last speaker. I was surprised at the terminology which he applied to the class of Super-tax payers. He spoke about equity and of the great necessity of our securing from the Super-tax payer moral support to our system of taxation. He referred to the poor Super-tax payers as people who bore the heat and burden of the day. Never since I entered this House have I heard language more flagrantly misapplied to the subject under discussion. Who are these people who bore the heat and burden of the day? When the hon. Gentleman was speaking I took from my pocket a newspaper cutting which I have carried about for several years. It is from a journal to which I am sure he pays considerable attention, the weekly paper called "The Nation."


I do not read it.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

I understood that "The Nation" was a supporter of the party to which the hon. Gentleman at least pays lip service. "The Nation" at any rate declared in June, 1917, that as a result of huge lending to the Government, representing no real saving on the part of bankers and financiers, when the War is over the propertied men of this country will be several thousand million pounds the wealthier. That statement has been borne out by the actual facts. I have here the answer by the Chancellor of the Exchequer to a question put in this House on 20th May last. That answer shows that, while the actual income from wages, as assessed on weekly wage-earners whose total incomes exceeded the Income Tax exemption limit, was £673,000,000 in 1920, it had fallen to £491,000,000 in 1921, to £395,000,000 in 1922 and to £300,000,000 in 1923. In other words, the total income over the Income Tax exemption limit, of the wage-earning classes in this country, fell more than half during the period from 1920 to 1923. But what had happened to the incomes of the Super-tax paying class in the same period? Their estimated total income, liable to Super-tax, was, in 1920, £516,000,000; in 1921 it had risen to £564,000,000; in 1922 it had fallen slightly to £509,000,000; and in 1923 it had risen again to £510,000,000. In other words, while their incomes fell only £6,000,000 during the total period mentioned, the incomes of the working classes fell by £373,000,000. Then when an hon. Gentleman talks about equity his sole plea in equity is to find a further £10,000,000 in relief of taxation for this class of Super-tax payer.

What is the economic argument which is used in favour of this change? We have heard the argument used to-day by practically every speaker who has supported the reduction of Income Tax, namely, that if you give the Super-tax and the Income Tax payers the benefit of a reduction in taxation there will be an added fund which can be used, either as a result of saving or as a result of spend- ing, to stimulate trade and industry. If there is anything that has been taught by the economic history of the past three or four years, when we have been reducing taxation and have taken 2s. off the In come Tax, it is surely that such relief in itself has dome nothing and can do nothing to stimulate trade and industry. An hon. Member opposite said that this proposed relief of the Super-tax payer would immediately—I think he said "immediately"—fructify in industry. If this £10,000,000 of relief will do that, may we ask him or some other hon. Member opposite to tell us where and what industry is languishing for shortage of capital? Is it coal mining; is it steel? What is it? We have not heard in this House of a single industry that is languishing for want of capital to stimulate it. But we do know that in times past, whatever may be the case now, capital savings have not always been invested wisely.

We know that savings have been invested in rum-running enterprises. We know that they have been invested in a wastage of the primary necessities of life. We know that they are invested abroad, and we heard this afternoon about millions of capital invested in China, exploiting Chinese children—seven days a week and 18 hours a day, for a wage which does not supply them with food—to compete with the products of British industry. I submit that it is an unwise use of the savings of British labour and British capital to allow certain privileged persons to export that capital where they will and as they will, and to use it in an anti-national fashion as undoubtedly many of them have done in the past. We have heard that in pre-War times the average export of British capital for investment abroad was in the neighbourhood of £200,000,000—some of it wisely invested, some of it not. We believe now about £150,000,000 is going abroad for investment, and we see, at the same time, our British Colonies unable to get loans in the London money market. Do the Government believe that our British industries are short of capital? If so, why do they not stop this capital from going abroad? If they do not believe that our industries are languishing for lack of capital, what becomes of the argument we have heard this afternoon that we must give this relief to the Income Tax and Super-tax payers in order that trade and industry may revive?

The question which was put to us on these benches by the hon. Member for Down (Mr. Reid) was perfectly fair. He asked us, what did we propose to do with these savings in order to secure a better result for this country? I do not require to remind members of the Government that there are half a million children under the age of 15 presently engaged in industry. There are children who have entered industry in the last 12 months. If you spent this money in giving these children a maintenance of £20 per year each and allowed them to go out into the playing fields where they would be sent if they were the children of the rich or sent them to school, as hundreds of thousands of them ought to be sent to school, to complete their education—if you took them out of industry and gave the parents a £20 a year grant to keep them out of industry, you would be able to absorb the equivalent of that half million from those of our population who are now draining away sums of money under the system of what is termed the dole. What of the old men and women of 65 and over—800,000 of them—who are in industry to-night and who, having borne the heat and burden of the day, having done their bit, are yet compelled to slave year after year until death takes them. These two classes, the infants and the old people, taken together represent 1,300,000—more than the total number of registered unemployed—and if the Government, instead of relieving a class, many of whom did not want it and did not ask for it, instead of relieving the Super-tax rich with £10,000,000 and throwing away £32,000,000 in relief of Income Tax, had taken this £42,000,000 and devoted it to getting the children and the aged out of industry and giving a maintenance grant for the children and pensions for the aged, then the £42,000,000 would have been spent in this country on stimulating trade and adding to the purchasing power of the people, enabling them to buy more clothes, boots, crockery, furniture, everything. Not one penny would have been invested abroad in anti-national enterprises. The method taken by the Government of relieving the Super-tax rich will add to the miseries and discontents presently among us. Along that road there is no escape. Unless we can increase the purchasing power of the common folk of this land, unless we can give the common people, as we call them, greater power to buy food, clothing and shelter for themselves, there is no possible way out of the miasma of trouble and despair that has settled upon millions of the people of this country. For these reasons I oppose relief to the Super-tax payer.

Photo of Sir Evelyn Cecil Sir Evelyn Cecil , Birmingham Aston

If I wished to reply to the hon. Gentleman who has just sat down, I think it would be fair to suggest that since the post-War Budgets and the Budgets just at the end of the War the Super-tax payers of all taxpayers have never had any remission. All other taxes have been reduced, but the Super-tax has remained as it was. I have risen, however, to make a different point, which is, I think, one of substance, and it is based on a. statement which the Chancellor of the Exchequer made in his Budget speech. After announcing that ho was going to increase the Death Duties the right hon. Gentleman said he therefore proposed to reduce Super-tax in as nearly as possible a corresponding proportion over as nearly as possible the same range of taxpayers and to approximately the same extent. My point is that the remission of Super-tax and the corresponding addition to Death Duties taken together represent thoroughly unsound finance. The two proposals stand or fall together, and I should like to induce the Chancellor to cancel both. I feel that in urging this point of view I I am not expressing my own opinion alone but also that of a number of highly qualified people in the Conservative party and in the Liberal party, and, for aught I know, even of many Members of the Labour party, unless they are still dabbling with the idea of a capital levy. I cannot believe, as a broad principle, that it is sound finance to tax capital through higher Death Duties in order to diminish charges on revenue through lowering the Super-tax.

If I may put the matter more simply, broadly speaking, it cannot be right to place a charge on capital to meet ordinary expenditure, or, I might say, it cannot be wise to take the capital of private persons or of public bodies and to treat it as national income. You do not do these things in private businesses, and I do not know why it should be done by the State. I should never dream of suggesting to any private business that I could influence that we should charge capital in order to relieve revenue. That is not the way to do things, and I confess to some surprise that any Chancellor of the Exchequer should, unless under most exceptional circumstances, take upon himself to make these combined proposals. There is, it is true, one exception which might justify, in my view, such proposals being made, and that would be if the position was one of great emergency and that the taxation of capital was applied to the redemption of capital, that is to say, the redemption of the National Debt, but, as a matter of fact, I do not think my right hon. Friend is doing anything of the kind. He said, in his Budget speech, that he was taking £10,000,000 off Super-tax and putting the same amount on the Death Duties.

Well qualified persons who have calculated the effect of these things maintain, some of them, that he is really get-ting out of the Death Duties £16,500,000 more than is required for the Prime Minister's £50,000,000 annual Sinking Fund by these new proposals. I do not approve of that £16,500,000 being taken in. this way, partly because I think the Death Duties, in all conscience, are quite high enough, but partly also because, unless the sum is going to the reduction of the National Debt, the finance is quite unsound. As one highly qualified critic put it to me, he himself would never have made these proposals, but if they were to be persisted in, he strongly urged that the additional Death Duties should be earmarked to pay off the National Debt. I do not know whether the Chancellor is prepared so to earmark them. That might afford some justification of his general proposals, but even then I confess, in my own mind, a considerable anxiety, because we have heard from time immemorial in British financial history of raids upon sinking funds, and however often you may earmark a sinking fund for a particular purpose, there is no guarantee whatever, either that the existing Chancellor of the Exchequer or some successor of his will not raid that sinking fund and the Death Duties for other than capital redemption of debt.

My other cause of anxiety is that, if you are going to increase the Death Duties in this manner, where are you going to stop? I have always opposed the Capital Levy. I have argued against it at general elections and on broad trade principles at all times, but we are approaching uncommonly near the Capital Levy as it is in these Death Duties, and when I remember what former financiers and Chancellors of the Exchequer have said, I feel the more uneasy on the subject. It was only the other day that I was reading a speech of Lord Oxford and Asquith highly commending Sir William Harcourt's tenure of office as Chancellor of the Exchequer, but what did he do? He was the first introducer of Death Duties, in 1894, and, if my memory serves me accurately, he then said that 10 per cent. was the full amount that ought to be charged on a deceased's estate in respect of Death Duties. What is the position now? Why, the maximum on the highest estates has reached 40 per cent., and how much further will it go? I want to know where the line is to be drawn. We do not know whether there are not members of the Labour party who would say that estates ought to be charged in Death Duties 100 per cent., but, really, by doing that they would be doing an infinity of harm to the general confidence, stability, and trade of the country, and to the continuity of the trade of the country. I am quite ready to admit that Death Duties have a certain moral use in protecting the idly disposed from the temptation of not working, which is unfortunately only too prevalent in every class of the community, but, as I said, there must be a line drawn somewhere. These Death Duties are heavy enough, and I deprecate the Chancellor's proposal to set any kind of precedent by further increasing them.

I am not speaking merely my own feeling in this matter. I know that it is widely felt in the party to which I belong and, I believe, elsewhere, and I would earnestly appeal to the Chancellor of the Exchequer and the Prime Minister to consider the views of so many of their supporters. Economically, an increase of Death Duties is a direct waste of capital. Capital is accumulated savings. It is self-denial on somebody's part.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Camberwell Peckham

On a point of Order. We are listening to an interesting discus- sion on the Death Duties, and I am desirous to be assured that those of us who are listening with great interest will be allowed to follow the right hon. Member along the lines he is now traversing.

Photo of Mr John Whitley Mr John Whitley , Halifax

I have been in some doubt whether the right hon. Gentleman could go on much longer without relating his argument to the remission of the Super-tax. It is perfectly in order to adduce an argument to show that the remission of Super-tax does not Justify the revision of the Death Duties, but I do not think it should become an argument on the Death Duties per se. I think it must be related to the balance which the Chancellor of the Exchequer has sought to establish between the two.

Photo of Sir Evelyn Cecil Sir Evelyn Cecil , Birmingham Aston

I quite recognise that, and in raising this discussion I ought to have said that I have an Amendment down to omit Clause 19, which is the Death Duties Clause, but I should not move it if I might make my point now. Perhaps that meets the hon. Member's point of Order. I was saying that capital is self-denial on somebody's part, and surely it is in the interests of the State not to dissipate it, but to encourage thrift in this respect, just as in the field of pensions or any other. But I will not pursue the question of Death Duties further. I would like to take one or two other points which I think have been taken by the Chancellor of the Exchequer in justification of his proposals. One of them is that he says that the remission of Super-tax will stimulate production. Whether that be so or not, the Death Duties under his proposals will still operate simultaneously, and at an increased rate, and, undoubtedly, Death Duties retard production. They are a severe burden to anyone engaged in trade, and, therefore, I do not see that the mere counterbalancing of Super-tax and Death Duties will do any good whatever in the way of stimulating trade as a whole. I do not know whether the Chancellor of the Exchequer thinks his proposals will attract certain Super-tax payers who, perhaps, have their eye on their own circumstances more particularly, and that they will give him their votes in consequence of these proposals. If so, surely that is a policy of pure opportunism. I have been told, personally, by one or two who say they are favourably affected by the new proposals, that they consider them bad finance, and they do not support them, in spite of the fact that they would give them some personal advantage.

The Chancellor of the Exchequer says you can insure against them. Now what are the facts about this? The real truth is that in very numerous cases you cannot insure. I happen to have some knowledge of a large insurance company, and I have here a. number of figures, which I shall be pleased to show the right hon. Gentleman or any other Member, showing exactly how far you can insure against these proposals. You are assuming that the life to be insured is insurable, and not impaired, and is not subject to any extra premium on account of occupation. You have further to be sure that the annual saving by this reduction of Super-tax is constant throughout the life of the insured person. If a future Chancellor of the Exchequer imposes fresh taxation, and lessens his means of saving, the policy of insurance must be dropped or surrendered. You must also have regard to the character of the estate. If it is that of a professional man, the estate may be five times the value of the gross annual income, and easier to insure. If on the other hand, it is an agricultural estate—and Amendments are to be moved on behalf of agriculture—it may be 20 times the value of the gross annual income, and much harder to insure. The actuary's figures—assuming the case of a normal life, with none of these disabilities—as to the actual age up to which you can insure against these proposals is from 53 to 55, and no longer. Anyone over that age cannot possibly insure against these proposals, and it is futile to suggest that he can.

Therefore I would, in all friendliness, appeal to the Prime Minister and the Chancellor of the Exchequer to cancel both the proposals in Clauses 13 and 19 as regards the Super-tax and Death Duties for three reasons at least—because taken together they are, first, unsound finance; secondly, they do not really tend to increase production, but at once spasmodically stimulate and retard it; and, thirdly, insurance against the loss is often quite impossible. If they cannot see their way to withdraw their present proposals, I can only earnestly trust their mistake will be rectified in the next Budget.

Photo of Sir Patrick Hastings Sir Patrick Hastings , Wallsend

I think every member of the Committee will probably agree that it is most unfortunate if many Members of the Front Bench on either side intervene in the Debate. I can assure hon. Members I will only delay the Committee for a very few minutes. I think I may say I am not very frequently an offender in this respect, and I must say with regard to this Budget I do not think I have said anything at all. But I am going to intervene to urge the Chancellor of the Exchequer—not that I feel I can speak with any great confidence as to the result, but I am going to urge him to think seriously once more before he decides inflexibly to enforce this Clause in the Finance Bill, not for any reason at all, I think, that has been given to-night, or indeed in the previous discussion. I am not concerned here with any—if I may use the expression—purely ad hoc argument about it being a rich man's Budget, nor, indeed, any purely economic argument such as that we have had from the right hon. Gentleman who spoke last, but from an entirely different point of view. I am sorry that the Chancellor of the Exchequer is not here at the moment, but if the Financial Secretary replies, he will perhaps think it worth while just considering the matter from this point of view. In my experience, and I believe the experience of practically every Member of the House, hardly anybody in the country, except perhaps a few manufacturers, are interested in this Budget. These questions of the silk duties that we have discussed, largely with the assistance of the hon. Member who sits in the corner behind me, until the late hours of the night, and, indeed, until the small flours of the morning, I do not believe interest the people of this country in the slightest degree. But there is one matter which does interest them, and, I believe, interests every one of us who is seriously concerned, as I know my right hon. Friend the Prime Minister is seriously concerned, and probably more so by reason of his responsibilities than any of us, in the feeling which is growing up in the country to-day.

We cannot open a newspaper to-day—and here I can assure the Committee I am speaking with all moderation—without finding half the discussion taking place upon what those representatives of the Press are pleased to call "the activities of the Reds." Most people in this country know perfectly well that we are not unduly affected by such considerations as those, and most of us—and I am sure the Prime Minister as much as anybody—know that in this country there is no more danger from those people, so called "the Reds," than there has been probably ever since this country's history began. But things are not tending in the direction of which he spoke when he gave vent to that prayer which we heard him give from his seat in the House, and I am going to give, if he will allow me, one example of what I mean, which happened two days ago in my own constituency, which is largely mining, every one of the mines in one part having closed within a very recent period. The chairman of one of the local councils, himself a working miner, came down to London to see the Unemployment Grants Committee with reference to some work he desired to have done. I saw him, and, after a considerable pause of silence, he began to talk about this Budget and this Clause. He asked me to tell him what people in London could know of the affairs in the North of England, in the state in which we are living now, when everybody is supposed to be looking to the Budget for some guidance as to what is the policy of this Government towards these great questions, and they really found that the one relief which was being given was towards Super-tax payers.

I can assure the right hon. Gentleman the Chancellor of the Exchequer, now that he has returned to his place, that I am not speaking in the slightest degree with a desire to raise the cry about a rich man's Budget or any other form of stock-phrase. I can assure him that this reduction in the Super-tax is raising a storm of genuine discontent throughout the North of England. People are absolutely roused to a state of fury. It is all very well coming forward and stating that there is a reason for it. The right hon. Gentleman has been asked by innumerable speakers to-night to tell the Committee in what respect the reduction in the Income Tax was going to benefit industry. Speaker after speaker has called attention to the fact that there is no lack of capital. It is not from lack of capital that we are suffering; the case for the Super-tax reduction is infinitely worse. The right hon. Gentleman may take it from me that a great many members in this part of the House are as much concerned to see that their constituencies remain as loyal to the constitution as hon. Members are, or suggest they are, upon the other side of the House. The last thing that anybody in my constituency desires is to be one of those so-called Beds about which we hear so much. But what answer can we give to our constituents? The Chancellor of the Exchequer has given us his Budget. We are bound to tell them, as I myself have had to tell my constituents, that when we come to consider the Super-tax proposals, that the Chancellor of the Exchequer has said that, whereas he is in the position to get some £10,000,000 from the Death Duties he proposes to use that in order to give some reduction of the Super-tax.

I can assure him that more harm has been done by that to those members of the public who are supporters of his—apparently ardent supporters—more harm has been done by the reduction of the Super-tax than possibly some of his advisers have allowed him to know. It is one thing which is causing immeasurable discontent. I can assure the right hon. Gentleman, as he knows—just as does the Prime Minister—that as every speaker behind me has said to-night, with all the terrible misery that is going on throughout the country—it does not require a speech such as that of my hon. Friend the Member for Bow and Bromley (Mr. Lansbury), who has told us about Ascot and so on, which are really infinitesimal compared with the major questions which he has to consider—it does not require instances of that sort to fortify our position; but when we have the Chancellor of the Exchequer using the £10,000,000 as he is doing in times like the present to give this Super-tax reduction, I can assure him that he is taking upon himself a responsibility which does to my mind weigh, or which ought to weigh, more heavily upon him, and which will do more harm than all the so-called Red propaganda to-day. There is no argument at this moment which is causing so much discontent than this reduction of the Super-tax. Even at this late moment, I do urge upon the Chancellor of the Exchequer to think for a long time before he insists upon this measure, and unless he is able here and now to give some definite reason as to how the reduction in the Super-tax is going to benefit the unemployed and those who are destitute to-day in this country.

Photo of Mr Samuel Roberts Mr Samuel Roberts , Hereford

I wish, if I may, to to add to the request made by my right hon. Friend the Member for Aston (Sir Evelyn Cecil) to the Chancellor of the Exchequer to strike out this Clause of the Finance Bill, and also Clause 19. I want to accept, and to make my own, the arguments of my right hon. Friend the Member for Aston. I appeal to the Chancellor of the Exchequer on these grounds, and also on the other points of view which I wish to put before him to leave this matter alone. The speech of the right hon. and learned Gentleman who has just sat down, I think, I might almost also plead in aid why the Chancellor should leave this matter alone.

9.0 P.M.

I dislike having to get up and to add my views to the great multitude of ingrates; because one does feel that people who as a whole believe in this Budget and accept such benefits as comes from it ought to be very chary indeed in their criticism of those portions which they do not like. I say definitely and at once that whatever the decision of the Chancellor of the Exchequer on these Clauses may be, I for one will not for one moment vote against it, and I simply make this appeal and desire to put one or two arguments before him as to why I think he is wrong. I am not going to say that the reduction in the Super-tax is bad. I believe it will do something to stimulate industry. I believe the Super-tax payer is entitled to equity and justice the same as any other taxpayer, but in these matters the question is one of balance. In this remission of the taxation the Super-tax payer with the increase of the Death Duties, the question I would, if I might, put to the Chancellor of the Exchequer, and that I trust he will be good enough to answer, is whether he will consider this question from the point of view of the encouragement to thrift—

Photo of Mr Samuel Roberts Mr Samuel Roberts , Hereford

—whether the right hon. Gentleman will consider the encouragement to thrift; whether he considers that thrift is a virtue which should De encouraged? The Super-tax payer is to be allowed to retain in his pocket—I object very much to those words "doles to the Super-tax payer," as if people are not entitled to the money which belongs to them! It is a question of what is taken away. What belongs to me, I believe, is my own. What is taken away by means of taxation is a necessary evil with which one has to put up. At the same time, when one talks about the relief of taxation it seems to me rather hard on the people who, as the hon. Member for Norwich (Mr. Young) has said, have borne the burden and heat of the day. I know that it is an entirely old-fashioned and out-of-date idea that anybody has a right to his own property—according to hon. Gentlemen opposite. I do not, however, want to deal with that point at all. I want to make, so far as I can, a reasoned appeal to the Chancellor from the point of view of thrift.

Take a concrete instance, that of a man with £100,000, which brings him in an income of £5,000 yearly. I wish to base my argument upon that—upon the 5 per cent. basis. Under the Budget of the Chancellor, that man, in his Super-tax payment, will receive relief to the extent of £131, but his Death Duties will be increased to the extent of £6,000. I want the right hon. Gentleman to consider the frame of mind of that man when he considers his own finances and his working out how the Budget is likely to affect him. He will find that the Budget leaves in his pocket £131 more than it did last year, but he also finds that there will be £6,000 added to the Death Duties, which his children will have to pay. He may or may not be a thrifty man, but the great urge to thrift on the part of most of us is to leave our children as well off, or better, than we are ourselves. Very few people save for themselves. It may be right or it may be wrong to save for one's children, but, then, you love your children and, the great urge to thrift is to benefit them, as I have suggested. The man I say finds he is into pocket £131, and that there is the £6,000 on the other side. He cannot insure against this. Really to insure for the £6,000 he has got really to insure for £8,000, because of the increased burden put upon him. What is the natural thing for the ordinary man who is not a man of very great stamina or moral courage to do? The average man would probably throw up the job and consider it was no use going on trying to be thrifty. The best thing he would say, was not to save for his children, because the Government were going to take it, but to say: "I will waste my substance in riotous living." I myself have known a good many people saying what they were going to do with this relief because of the extra burden of the Death Duties. People are not altruistic enough to save a lot of money for the Government, though we may get educated up to that pitch in time, and the immediate effect of the increases in the Death Duties will not be an encouragement to thrift, because people will -say, "What is the use of saving it, it is going to the Government." As an alternative they would find means, by various perfectly legal methods, of benefiting their children in their own life time at the ultimate expense of the Exchequer.

The benefit given to industry, the encouragement to investment and to savings, by the remission of the Super-tax is taken away, and more than taken away, by this great increase of the Death Duties. Only one class, as far as I can see, will really benefit, and that is people with large incomes and no capital. I do not want to appear to be unduly criticising the Government, but because this may lead to a certain amount of political trouble, I do ask them to reconsider this question of the relief of the Super-tax and this question of balances. What we are proposing would be a gain of £2,000,000 to the Exchequer this year. Let the Government accept that gain, and they will satisfy a very great deal of the best Conservative opinion in this country, the opinion of people who really consider the national interest rather than the temporary interest of what they are going to spend this year or next. Even at this late hour, if they will go back to the status quo and not make this change, I believe they will be doing a great benefit to themselves and to the country.

Photo of Mr David Lloyd George Mr David Lloyd George , Caernarvon District of Boroughs

I would like to enforce the appeal made by the hon. Member who has just sat down. This provision with regard to the Super-tax does not seem to me to be an essential part of the fiscal scheme of the Chancellor of the Exchequer, and the proposal will not really interfere with the general scheme of his fabric. When the reduction of the Income Tax was discussed, I had no hesitation at all in speaking in favour of the Chancellor's proposals, and I voted for it. I put this in a totally different category. The Chancellor of the Exchequer ought to regard these taxes from the point of view of the very serious condition of industry. It is undoubtedly very alarming at the present moment. Anyone who took the trouble to read the railway traffic returns for last week would see that they were very alarming. In the case of one railway company, the returns from goods had gone down something like 30 per cent. compared with the previous year. That applies to most of the railway companies doing their business in the industrial districts. It does not apply to the same extent to the southern railways; but in the case of the great industrial railways the traffic is seriously down. We need not go to the import and export returns, which are all so very full of menacing details—very full—to see that our business seems to be paralysed and on the whole getting worse. I suggest to the Chancellor of the Exchequer that he ought to regard his fiscal scheme entirely from that point of view.

The Income Tax is much more of a tax on industry than is the Super-tax. As he knows very well, Income Tax is charged upon the profits of a business. That is not the profit that goes to the individual, but the profit made by the concern. In every good concern a considerable proportion of profit is held back to provide a reserve, for waste, and for all the things that are essential to a good going concern, and the tax is imposed upon that; therefore when a reduction is made in the Income Tax, the benefit goes in very many cases direct to industry. But that is not the case with the Super-tax. The Super-tax is not levied merely on realised income, but on the income which comes into the hands of the individual for his own personal expenditure. He may put that money back into industry, but on the other hand he may not. Some people undoubtedly do. I am not going to say that if the Chancellor of the Exchequer had no other object upon which he could more appropriately and more usefully spend his £10,000,000, that it would not be fair to cut down the Super-tax. I think it would be. There is no doubt at ail that many of the men who receive huge, incomes do not spend the money upon themselves. [Interruption.] Well, they must be very clever men to be able to do it, and they do not; very often they put it back into investments and into the development of their business, and the proportion which they spend upon their own personal enjoyment and indulgence is very often not as high as one would imagine. If the Chancellor of the Exchequer had plenty of money for every purpose, there would have been a good deal to be said for the reduction in the Super-tax, because to a certain extent a high tax does discourage bold and ingenious minds from projecting new schemes for the purpose of developing the trade of the country and producing employment. I do not in the least underrate that point of view, and I am not making the criticism from the point of view of saying that these people are getting huge incomes and ought to pay. That is not my point of view.

What could the Chancellor of the Exchequer have done? The hon. Gentleman who has sat down has pointed out that he might have abstained from putting up the Death Duties. I am not entirely with him there. I have always thought that, on the whole, it was a fairer method of taxation to take the money out of the good luck of the man who inherits a great fortune than to take it out of the earnings of a man. But there are other ways in which he could do it. I am not going to enter into any details, but I can just indicate that there is the trouble he is in about his pensions scheme, and how he is going to get over this very bad period without charging industry with 4d. or 3d. That is, undoubtedly, a very serious problem, and I speak as an out-and-out supporter of the pensions scheme. I should have thought he might postpone his Super-tax reduction in order to finance that scheme during this bad time, thus saving an additional burden on industries which are in a very bad way. The Secretary of the Miners' Federation said the other day that since January, 1924, 500 pits had closed. I dare say some of those pits are small, but some of them are not, and, after all, 500 pits are 500 pits, and that is a very serious thing in the history of any country. When I was passing up to the North the other day I could see shipyards with nothing in them, and there was a general sense of despair. I should have thought the Super-tax man, who is doing well, otherwise he would not have the Super-tax to pay, the man, for instance, who has £50,000 a year—

Photo of Mr Winston Churchill Mr Winston Churchill , Epping

The right hon. Gentleman knows well that Income Tax is levied on the three years' average and Super-tax is levied on the previous year. Consequently, a mail may be making no income at the present moment, and yet be liable to very high taxation as a result of his trading two or three years ago.

Photo of Mr David Lloyd George Mr David Lloyd George , Caernarvon District of Boroughs

The Chancellor of the Exchequer could deal with cases of that kind—and there must be cases of that kind—where a man who is receiving no income is called upon to pay in respect of income he has already spent; but if he has been receiving £50,000 or £100,000 a year he ought to have a little to spare for the Super-tax, even for the third year. But if the Chancellor of the Exchequer were to meet exceptional cases of that kind, they would not take £10,000,000. A million would far more than cover those cases. Because there are a few hard cases of that sort the Chancellor of the Exchequer takes his pen and writes off £10,000,000 for people who are not in that plight at all. If there is an industry which is struggling hard to get along, can barely keep its gates open, and which is losing money—there are a good many of them in that state, and they are only going on in the hope that in a few months perhaps trade will improve, and they go on like that from year to year—these industries are to be taxed, and taxed upon their three years' average, although they may be making no profit at the present moment. If the Chancellor of the Exchequer wanted to help industry, he should see that these new burdens do not fall during the bad period.

In the year 1914 the Budget of that year did not materialise, because the War came and we put up the Super-tax and we raised £10,000,000 to relieve the burden of the rates throughout the country. That is the exact figure which the Chancellor of the Exchequer proposes to write off. He knows that there are very many collieries and works which have been oppressed by the heavy burden of rates, due largely to unemployment in many districts, and the worse the trade is in a district the heavier is this burden. If the Chancellor of the Exchequer could do what we were unable to do in 1919, 1920 and 1921 because our Budget was very heavy, that is deal with the necessitous areas, it would be a good thing. I am just giving reasons now why he should not interfere with this tax this year. It is not because I am opposed to a reduction in the amount, but because I am opposed to a reduction at the present moment while the Chancellor of the Exchequer has other calls upon him. When the right hon. Gentleman proposes to put fresh burdens upon those who have to pay Death Duties, when he has also got a proposal which is an integral part of the Budget to put fresh taxation on industries in connection with a pensions scheme, and when he finds in other directions the burden is so heavy, I ask him to respond to an appeal from all sides of the House not to interfere with the Super-tax.

Photo of Mr Winston Churchill Mr Winston Churchill , Epping

This proposition for reducing the Super-tax can only be considered in conjunction with the other proposal which has been put forward. So far as I am concerned, if one were rejected the other would fall. [HON. MEMBERS: "Why?"] Because I would not for one moment think of adding to the burden of the Death Duties without giving some relief to the Super-tax payer. I am aware that that is a view which does not tally with the opinion expressed by Members of the Labour party, but my propositon stands as a whole. I know that there is a strong disposition in some quarters to drop this proposal to increase the Death Duties and to reduce the Super-tax, and that is an opinion which commands the support of a considerable number of thoughtful men. Certainly we have to remember the use that can be made of a proposal of this kind.

Photo of Mr John Beckett Mr John Beckett , Gateshead

You are proving that there is a class war, but you are like a voice crying in the wilderness.

Photo of Mr Winston Churchill Mr Winston Churchill , Epping

It is all very well to interject observations of that kind, but, surely, if you are carrying on a class war it is better to stand up to defend it. At any rate, the hon. and learned Gentleman the Member for Wallsend (Sir P. Hastings) made a speech in which he referred to the terrible effect produced in the minds of the people of the North by the remission of the Super-tax, and he spoke of the way in which the Communists and the Reds had alarmed some members of the Government. I am aware that a proposal like this lends itself to misrepresentation if it is not fairly stated, or if the other part of the proposal is not fairly stated. I foresaw that at the beginning, but we thought we were strong enough to act according to what we believed to be the merits of the case, and I was not deterred by the obvious consideration that the reduction of the Super-tax would be most dishonestly denounced as being a mere relief to the most wealthy people in the world or in the country, and that all kinds of capital would be made out of that, while no mention would be made of the fact that a further burden is being transferred to them through the agency of the Death Duties.

I think, in the time at our disposal, we shall succeed in establishing the soundness of the grounds on which we have acted, and the results which will be effected in the general life of the country by three or four years of steady policy from one broad point of view will be sensibly appreciated by all classes in the State. I do not think we are bound to present our case in isolation; in so far as you connect these two propositions, they are a transference of burdens. I should have thought the proposition of linking these two proposals, one the reduction of the Super-tax and the other the increase of the Death Duties, would have been one in consonance with some of the ideas we have heard from some of the Labour benches to the effect that capital rather than income should be a subject for taxation. I am surprised to find that it should be denounced in no unmeasured terms by the hon. and learned Gentleman the Member for Wallsend, who held up his hands in holy horror and spoke about transferring £10,000,000 of taxation from income to capital, from the live hand to the dead—he held that up as a frightful act of class warfare, and I think this shows that even some of our opponents are getting a little away from their own first principles in their desire to make every point a matter of prejudice against the Government which they are attacking. I would never attempt for a moment to justify this transference as part of a general principle, but I think there are very good reasons for it at the moment. I agree with much that is said on this side of the House against pushing the Death Duties further than they have already been pushed on account of the resulting diminution of the capital fund. Therefore, I make no general case for it, although I can see that hon. Gentlemen opposite are not entitled to attack such a transference on their theories. I am not basing myself on that; I am basing myself in this matter on this particular proposal at this particular time and within these limits and that is all.

I am in a most disinterested position as Chancellor of the Exchequer because if I took the advice tendered to me by my hon. Friends and responded to the appeal from the Liberal and Labour Benches, and wiped out the Death Duties and the Super-tax relief in one stroke from my Budget—and I could easily do it even now—as far as the Exchequer was concerned we should be £2,000,000 better off this year and neither better nor worse off in any subsequent year. Therefore, from the point of view of the Chancellor of the Exchequer this proposal is a most disinterested one. It faces trouble, it faces misrepresentation, certain misrepresentation, gross misrepresentation, dishonest misrepresentation. It also faces honest misunderstanding in many quarters. It produces features in what is called the rich's man's Budget which many rich men will view with misgiving. Generally it appears a most quixotic effort on my part.

I will tell the House quite frankly what actuated me. It was the consideration of the merits, having regard to our present situation. Like everyone else I am deeply concerned at the trade prospect and aspect and at the unemployment which lingers and is even increased in one quarter or another—I decline utterly to judge of the effect of measures by the results in a short period. I think it silly to say that since the Budget was announced 100,000 more unemployed have been on the register, or that since the Budget was announced trade has fallen off, or that the imports of raw material have diminished, as we were told earlier in the evening. To say that those things can be traced to a declaration only six weeks old is absurd. Therefore, I decline to be judged by what has happened in a particular month or fortnight. Broadly speaking, I have been led to believe that it is an increase of enterprise and effort that is required on the part, not merely of the wage-earning classes—their effort is very great—but increased enterprise and effort on the part of the capital-owning classes of this country. You have to deal with human nature as you find it. There are many persons in this country in comfortable circumstances managing businesses, with a great deal of power to influence an increase of production, who are deterred by the present heavy taxation from running all the risks and making all the efforts that are required from them. They say, "Our business is very sound. It is running on a very small basis, and we have shut down as much as possible. We are taking no risks; we are not going to embark on any speculative enterprises where we will have to go on putting in capital for three or four years. We are not going to take any of those steps at the present time because if we are wrong we will lose and reduce ourselves to a very crippled condition, and if we succeed an enormous proportion is taken away." Very nearly half is often taken away by the present high rate of taxation. It is the need for that serious effort that has led me to make a proposal exposed to so much hostile criticism from such diverse quarters in our political spheres.

I have found among the official advisers, with whom I have intercourse, an opinion that nothing would more stimulate the saving and enterprise of the country than a diminution in the Super-tax, although I was also assured that probably no one would ever dare to attempt that step. I myself should never have thought it justifiable to take it, unless it were linked, as it is, with this other proposition of the increasing of the Death Duties. It constituted a factor which, added to the reduction in the standard rate and the discrimination between earned and unearned income, enabled me to make a diminution of approximately a shilling in the £ with resources which could not possibly otherwise have achieved that purpose. That was the scheme, and I think that it should be very carefully weighed and studied by the House. We are not so poor, we are not so feeble at the present time in the control of the government of this country as to be afraid to make a proposition which we believe to be sound because it can be misrepresented and because it can be made the subject of prejudiced attack.

I have acted in this matter not at all from a desire of reinforcing the funds at the disposal of the Exchequer, but of shifting the burdens on a class of very heavily taxed taxpayers from one part of that body where it is inconveniently borne to a part where it is more conveniently borne. Broadly speaking, although you might cite individual cases against it, throughout the whole range this is a transfer of taxation from one part to another of the same taxpaying class. It is a principle which no party has less right to oppose than those on the benches opposite. It is quite true that some hon. Members on this side of the House are of opinion that it will be far better to keep the Death Duties at their present level and leave the Super-tax unrelieved. That is a very general and very wide view. As a permanent policy I would subscribe to it, but one must take into consideration the peculiar circumstances of the moment, the need of producing a psychological effect within the small limits open to us, of making people feel that they can and ought to run the greater risk and hazard in starting enterprises, and that they will in return receive a greater measure of reward. Having regard to that, we think, after careful consideration, that at the present time, without any interest in regard to the revenue of the State, it was a wise and prudent transfer to make and one which will conduce to the economic advantage and activity of the country, which will lead to greater production of new wealth and will not prejudice the existing accumulations of old wealth, which will also tend to some extent to give a needed stimulus to enterprise, and which in no way alters the social balance to the detriment of the wage-earners as compared with the capitalists of the country. That is the proposition which we put on its merits before the Committee, and we hope and trust that we will 'be judged in this matter by the broad effects, which will be operative over a period of time during which it seems probable that some of us, at any rate, will continue to be responsible.

Photo of Mr Hugh Dalton Mr Hugh Dalton , Camberwell Peckham

I do not know whether the Chancellor of the Exchequer, led on by the encouraging cheers of a certain section of his supporters, will have the hardihood to take the Whips off when this Amendment of ours goes to a Division. He shakes his head. In other words, those of us on this side of the Committee who have attacked this proposal on the merits, know that, if only the automatic majority were not to be put into operation, we should, on a free vote of the House, have a majority in the Division Lobbies. The Chancellor of the Exchequer, I think, only made a verbal slip when he stated that speakers on this side had appealed to him to withhold both the reduction of the Super-tax and also the increase of the Death Duties. No speaker on this side has said that at all. We willingly accept, I think—at any rate, speaking for myself, I willingly accept—Clause 29, to which we shall come later, as an instalment of the larger policy of increasing the Death Duties to an even greater extent in the future, and, in the words used by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), we believe it would be better to tax a man on his good luck in having come into an inheritance which he had done nothing to earn or deserve. No opposition is likely to come to the Chancellor of the Exchequer, except from his own supporters, on the question of the increase of the Death Duties.

But, reading this reduction of the Super-tax with the reduction of the standard rate of Income Tax, I think we are in the presence of an even greater scandal from the political point of view than the Silk Duties and other subjects upon which much time has been spent during the past week. My own opinion is that this Clause which we are now discussing is the most flagrant Clause in the whole Budget, and that against which the greatest volume of protest should be directed. An earlier speaker from the Liberal Benches, the right hon. Gentleman the Member for Norwich (Mr. Hilton Young), spoke about the equities of the case. He spoke about the equity of giving the Super-tax payer, not only the advantages which always accrue in very large measure to Super-tax payers from reductions in the standard rate of Income Tax, but of giving him also some special reduction in the rates of Super-tax. Equity is rather a disabling thing, but, if we are to talk about equity at all, then the smaller inequity is drowned in the larger inequity, and the chief inequity of which I am conscious in approaching this problem is the inequity of these enormous incomes subject to Super-tax which are being received by persons who in a great many cases are not in business at all—people living idly on inherited wealth, people living on appreciation of land values and other socially created values, and even interested in business operations in Shanghai for the benefit of the British Empire.

The business man is always to the fore on these occasions when demanding favours. He is a little like the Plymouth Brothers, who think that they, praying in their own watch tower, are the only people in Heaven. Rather similarly, the business man seems to think he is the only person who pays taxation or receives a large income for the services he renders. The statement has been made from these benches, and I am prepared to make it again and to prove it, that this Clause gives enormous doles to the rich. The word "dole" has been objected to on this occasion from the other side of the Committee, but, when I say that this Clause gives enormous doles to the rich, what I mean is that the rich receive large additions of net spendable income as a result, without rendering any additional service. Is the right hon. Gentleman going to get up and tell the Committee that the millionaire who, under the scheme of tax reduction outlined on page 14 of his Financial Statement, gets an additional income of £40 a week renders any additional service as a result of that?

He cannot even guarantee that this money is going to be put back into industry, even if that were a desirable thing to do with it, which I am not for the moment discussing. I want simply to face realities, and not to endeavour to paint lurid pictures, which it would be easy enough to do in view of some of the disclosures that have recently been made as to how wealthy people really do spend their money. We are dealing with actual facts. It is not simply the business man who receives these incomes and spends them on expansion of business. We know of all the anonymous turpitudes of General "X" and Mr. "A" and all the rest of them, and it is worth noticing that these are among the 87,000 happy people who are going to benefit by the Clause which is now before the Committee. I have no doubt that it was the knowledge of these facts, and of the benefits about to be conferred upon undeserving persons, which led a large number of hon. Members on the other side to applaud the proposal not to give these doles against which we on these benches have risen to protest.

I have no wish to ladle out, as some hon. Members have done earlier in the Debate, large quantities of statistical information, but there is one fact which I think it is worth while to reassert in connection with this Clause. The Income Tax has already been reduced by the vote on the previous Clause, and that makes it all the more necessary that we should protest against these further reductions. Whereas before the War the amount received from Income Tax and Super-tax taken together used to cover the whole of the debt charges twice over, and leave half the total yield for the expenditure of the country on defence and social services, after these reductions the net effect on Income Tax and Super-tax combined is that next year the Chancellor will get only £325,000,000 from the Income Tax and Super-tax to meet a total debt charge of £355,000,000. Before this, it was possible to say that the Chancellor of the Exchequer was operating a penny-in-the-slot machine for the benefit of the wealthier sections of the community, as a result of which they put in their Income Tax and Super-tax and pulled out their War Loan interest. The change which he has made this year will have the result that now other people are going to contribute their pence to this machine, while the benefit is still going to accrue to those who drew it before.

I think that on a broad view of the distribution of wealth, the distribution of opportunity, and the general justice of the case, it would be absolutely impossible to defend this Clause in any disinterested and impartial assembly. As has already been proved, and as I again repeat, there is a strong body of opinion arising on every side against giving these exceedingly inequitable and inexpedient reductions. The Chancellor of the Exchequer said he felt justified in making this reduction now, that he was quite willing to face misrepresentation now, believing that this Parliament had a long period to run. His hope is that before the next General Election, other incidents will have intervened to make people forget—at any rate those who are not Super-tax payers—the extraordinary departure from the principles of sound finance which is embodied in this Clause. He is banking upon this great issue being obscured by others which will arise between now and the next appeal to the country. That, however, should not deflect us in the attitude we are taking, and I repeat that I defy the Chancellor of the Exchequer to allow this Clause to go to a division with the Tory Whips off.

Photo of Lieut-Colonel Hon. Cuthbert James Lieut-Colonel Hon. Cuthbert James , Bromley

I should like to refer to the pontifical utterances we have just heard from the last speaker. He assures us that you will improve trade by piling on taxes in every quarter. Really, an argument of that kind leaves me perfectly cold. There are certain points with which I disagree profoundly with the Chancellor of the Exchequer. He spoke a few minutes ago about transferring the burden from the live man to the dead.

Photo of Mr Winston Churchill Mr Winston Churchill , Epping

From the live hand to the dead hand.

Photo of Lieut-Colonel Hon. Cuthbert James Lieut-Colonel Hon. Cuthbert James , Bromley

If you go up and down the country and see estates which the hand of death has visited in the last five or seven years, you will see them falling sadly into disrepair through want of capital and through the heavy imposition of the Death Duties. You will also see it in industry. You will see the one-man company, for example, the one man who is supposed to have all his money locked up in the form of scrip and stock and shares in his safe. You would think his death would not affect the situation very much, but it does. To meet these staggering Death Duties the estate has to be sold and the firm is less well conducted than it was. For these reasons I fundamentally disagree with the general proposals put forward by the Chancellor. I shall certainly not support the hon. Member in his thesis that a Capital Levy is excellent. I spend the whole of my time as a politician outside this House proving from A to Z that the Capital Levy—

Photo of Mr David Kirkwood Mr David Kirkwood , Dumbarton District of Burghs

You are not going to give us any of that sob stuff.

Photo of Lieut-Colonel Hon. Cuthbert James Lieut-Colonel Hon. Cuthbert James , Bromley

Is it in order to suggest that I am giving "sob-stuff"?

Photo of Mr John Whitley Mr John Whitley , Halifax

I have some difficulty in understanding the hon. Member's interruption and in knowing whether it is in order or not.

Photo of Lieut-Colonel Hon. Cuthbert James Lieut-Colonel Hon. Cuthbert James , Bromley

I hope between now and the Report stage the Chancellor will use some means of bringing the two conflicting principles more or less together, and assuaging the genuine alarm felt by agriculturists in particular, and by one-man companies in general.

Photo of Mr Edwin Scrymgeour Mr Edwin Scrymgeour , Dundee

I am not surprised that the Chancellor of the Exchequer should exhibit his championship of those who occupy such exceptional opportunities for the enjoyment of a society life. It is just what we might have expected. The Debate has shown that while these people have even improved their position, the general body of toilers, upon whom we lay so much of our taxation indirectly, occupy a position of 10 per cent. of a disadvantage in the matter of their ordinary weekly wages as compared with their pay before the War. If the argument is correct that only in this way are we going to give the requisite fillip to industry we should have expected a far greater instalment of reduction in order to facilitate the declared object. If we really have gone, as has been said by some hon. Members opposite, beyond Sir William Harcourt's figure of 10 per cent with regard to other taxation, which we are not entitled to dwell upon, up to the point of 40 per cent., it goes to show that practically in all parts of the House that line of reasoning and even that extent of additional taxation was considered to be justifiable and thoroughly warranted. The question that arises to my mind is as to what the Chancellor said. Are these two classifications, or rather two sections of the same classification, or are they not, able from their circumstances to meet the taxation which has already been imposed instead of making this reduction.

When we have the fact before us we find, as the ex-Prime Minister has said, that these people would not be paying this Super-tax if they did not have the requisite income. As has been shown, many of these folks are not in business at all. They are, broadly, the representatives of a demoralised society, demoralised because apparently they have too much time on their hands and a disinclination to work, which is one of the points made by the Chancellor of the Exchequer concerning unemployed people. The reason why they have a disinclination to work is that they do not require the work. The money is forthcoming without their making any effort at all. In fact, we had one right hon. Gentleman, during the War, explaining that he was really becoming rich through the shipping industry, and it was such a remarkable state of affairs that he really could not tell how it came about. I know the shipping industry has gone somewhat off since then, but it is an illustration of the anomalous situation when you think of the body of people who have such a tremendous struggle to maintain existence and whose conditions were so correctly described by the same Chancellor of the Exchequer when he was expounding a certain scheme which had the ostensible object of providing 10s. a week in order to meet in some degree their stress of circumstances. The ex-Attorney-General made what I feel was a specially important point. I know the Chancellor of the Exchequer does not care about giving very much importance to it, but I reckon it is of the utmost importance. He urged the point that there is a section of the community who are giving some concern to the Government, not only in this country, but elsewhere, and those people are, naturally, fastened upon, as the generality of us say on these benches, to show how harmful are the representatives of these class interests which unquestionably exist and are only being intensified by this Clause. That situation is exasperating to the men who are taking the course which involves absolute disaster to the Labour movement. I am convinced of that. At the same time, I agree with the ex-Attorney-General that some better explanation must be given than this juggling on the part of the Chancellor of the Exchequer, of taking a little off here and putting a little on there concerning a class of taxpayer whom he dare not say are not able to pay what they are now asked to pay; but who could pay much more than they are asked to pay. I say to hon. and right hon. Gentlemen opposite, if they cannot find a better way of meeting the unrest that arises from this sort of thing than saying that you will put down by force if necessary anything which endeavours to express itself unconstitutionally, you are going to be put into a very awkward predicament, and those who on this side of the House stand by the constitutional position will be handicapped, when we find that this sort of thing is going through the House in support of the very people who aggravate these feelings in the country.

Recently there was a scene in St. James Park, which is probably familiar to hon. Members opposite, when a queue was lined up of a very different character from the queues that we see outside the Employment Exchanges. I refer to the queue of carriages lined up in St. James' Park, where the rich people were flaunting their wealth with utter disregard for any question of economy. You would be insulting those people if you talked to them about thrift. One hon. Member opposite counselled the Chancellor of the Exchequer to think about thrift. It is very annoying and exasperating when we hear from the other side talk of the necessity for thrift, when this comparatively small number of people, with their millions of money, are able to flaunt their wealth, and are able to go about in society, not only in our own country, but in every part of the world, and even in the districts where there are people on what is commonly called the dole, and who are frequently insulted by the suggestion that they do not want work.

10.0 P.M.

If these rich people appreciated their manifest blessings as far as this world's affairs are concerned, and if they realised their duty, instead of coming forward occasionally with a contribution to the National Exchequer, they would say, "In face of what we see at the Employment Exchanges, and of the need to help the nation, we are determined to give all that we possibly can in order to ameliorate the circumstances that beset these poor people." Only the other day one read in the newspapers of a case in which a poor woman in the East End of London suffocated her children. An appeal was made from this side of the House to the Home Secretary, and, to his credit, he responded with the practical result that he reduced the sentence so far that it meant the woman's immediate release. That mother was in the appalling condition that she thought it better to take the life of her own children.

Photo of Mr William Joynson-Hicks Mr William Joynson-Hicks , Twickenham

The hon. Member has mentioned a particular case. It is only fair to say that the appeal came from both sides of the House.

Photo of Mr Edwin Scrymgeour Mr Edwin Scrymgeour , Dundee

That does not alter my argument. I appreciate the right hon. Gentleman's point. I did not know that an appeal had been made from the other side. I did not make the reference for the purpose of saying that the appeal came from this side. My object was to deal with the circumstances. There is an appalling amount of desperation in the country. I have set my face in several elections against anything that is going to involve physical action to deal with these matters. I am now constitutionally presenting to the Chancellor of the Exchequer a case drawn from past and present experience of the struggles of those whom he formerly represented. He knows what it means in the great industrial constituency of Dundee, in regard to which my hon. Friend (Mr. Johnston) has presented a very striking set of circumstances. The two representatives of the constituency which the Chancellor of the Exchequer formerly represented are here to-night protesting most earnestly against his proposal to relieve those who are able to relieve themselves.


The Chancellor of the Exchequer, in justifying the reduction of Super-tax, said that it was the Government's special effort in order to stimulate industry and enterprise. He said he hoped to bring in new capital in order to give us more work. My experience of certain districts in the north, where unemployment is rife, is not that there is lack of capital, not that there is any new capital required, but that the capital there is lying idle and cannot be used. I cannot see how a reduction in Super-tax is going to bring orders to the shipyards, where their capital is doing nothing, or to the blast furnaces, the rolling mills, or the steel works, where they have more capital invested than they can possibly use. Therefore, I fail to see how the reduction of the Super-tax can bring about the stimulation of industry which we all desire to see. If the relief is to stimulate industry, it should be granted to those who are in industry. A large proportion of the Super-tax payers who have no part in industry, who belong to the rentier class, who have retired and are taking no further part in business enterprise, will get the same relief as those who are still engaged in enterprise. The difficulty to-day is not the lack of capital but the lack of work for our shipyards which are lying idle.

If the right hon. Gentleman had been able to use the money which is being granted to the Super-tax payer in the form of grants in aid of rates which are crippling industry and which are a first charge upon any enterprise, the relief would have been of much greater benefit. The rates have gone up tenfold in recent years, and our shipyards are unable to compete with shipyards abroad, because before they can even lay down a keel they have to pay rates tenfold that of their competitors. Therefore, I suggest to the right hon. Gentleman as a more effective way of promoting industry to relieve the high rates that are crippling industry throughout the country which would have given an immediate relief far more effective than any relief to the Super-tax payers or even to the Income Tax payers. The view is held in industrial areas that, when you have a certain amount of money to give away, and a certain amount of relief to dispose of, to single out this particular class who are well above the poverty line and leave the workers still to pay their 4d. a lb. on tea and their ¾d. on sugar, and to pay the same prices for beer and tobacco, while the man with £2,000. is to get relief, is causing unrest and dissatisfaction in these dark spots where unemployment has been rife for so many years. These people cannot understand why the man with £7,000 a year should have relief granted to the extent of £347 16s. 3d., and why the man with £15,000 a year should have £852 16s. 3d. given in the way of relief, to which these poorer people have to contribute. It is a gratuitous insult to the rest of the tax- payers to single this particular section out for relief, to give them a benefit for which they never asked and which they do not deserve, instead of giving it to their more unfortunate fellow taxpayer.

The wages bill has decreased by £500,000,000 during the last two years. At the same time the Income Tax assessment has gone up, so that the poor are getting poorer and the rich are getting richer, and this is the particular time chosen to give relief to the Super-tax payer rather than to the indirect taxpayer. The penny in the pound Income Tax last year produced £5,000,000, and this year will produce £5,500,000. This shows that there is no lack of money, so far as the Income Tax or Super-tax payer is concerned. I appeal to the Chancellor of the Exchequer to consider further whether he cannot give some real relief to enterprise, because there is no good in saying that you are going to give it on profits made when there are no profits, and when there is no work to make profits out of. You want to give relief which will enable work to be undertaken and profits made. I submit that things are so bad that something is needed to relieve these distressed areas and to give some hope that the wheels of industry may be set going. The mere relief of Super-tax payers is no advantage to the workers in districts where there are no orders, and consequently no profits.

Photo of Sir John Marriott Sir John Marriott , City of York

The speeches to which the Committee have just listened seem to me precisely to illustrate the point which at an earlier period to-day I was endeavouring to make. Hon. Gentlemen opposite find it impossible to discuss this matter except from the point of view of the individual taxpayers. They are incapable of regarding the economic situation as a whole. We on this side who are favouring the reduction of Super-tax are not favouring it in the interests of the individual taxpayer, but because, rightly or wrongly, we honestly believe that it will give a stimulus to industry as a whole. Of course, it is possible that we may be mistaken. [HON. MEMBERS: "Never!"] It is not very likely, I admit, but still it is just possible that even those who have given some thought to this matter may be mistaken on a point of such importance. But I frankly confess in regard to this Clause that I find myself in a position of very considerable embarrassment.

I strongly favour a reduction of the Super-tax which this Clause is intended to carry out for reasons which I will not repeat, because they are practically reasons which I gave in relation to the previous Clause. On those grounds I believe it to be of very considerable importance that we should in the interests of industry reduce both the Income Tax and the Super-tax, but I cannot feel the same enthusiasm for the reduction of the Super-tax if that reduction is made dependent, as it was made dependent in the original speech of the Chancellor of the Exchequer, upon the increase of Death Duties. If I had to choose between the retention of the Super-tax at its present level and the retention of the Death Duties at their present level, I should favour keeping the Super-tax where it is. I suppose that I should not be in order if I were to deal with the Death Duties in relation to the present discussion, but I think that I am entitled to remind the Committee, as I have no doubt the Chancellor of the Exchequer has already reminded it, that when he opened his Budget he did bring forward these two proposals as absolutely interdependent and interlocked propositions. When he opened the Budget in the Committee of Ways and Means he said, in reference to the interdependence of these two propositions: I would like first to say this. In the new taxation proposals which I am going to make I trust the Committee will remember that the scheme I am submitting must be judged as a whole. It contains features which will, I have no doubt, be obnoxious individually in different quarters of the House, but every part of it is related to every other part, and I hope and trust that when it is viewed in its entirety as an organic whole, the scheme will be found to be of help in the present general situation of our affaire."—[OFFICIAL REPORT, 28th April, 1925; col. 64, Vol. 183.] Again, a little later on the same occasion, he said: I believe that a moderate diminution of the burden upon wealth in the process of creation, even if that burden is to be transferred to accumulated capital passing at death, will tend to relieve the pressure upon the highly creative facilities of the community."—[OFFICIAL REPORT, 28th April, 1925; cols. 85 and 86, Vol. 183.] He said that the shifting of the burden from wealth in process of creation to accumulated wealth passing at death was to be commended to the Committee on two grounds. What were those grounds? In the first place he said, "It will tend to relieve pressure," upon what he called, in very picturesque and admirable words, the highly creative faculties of the community. Secondly, he commended it to the Committee on the ground that it was, as he put it, in accord with modern conceptions. I am not quite sure what the Chancellor of the Exchequer meant by being "in accord with modern conceptions." Did he mean the conceptions which are held on the other side of the House, the conceptions of the Socialist party? [HON. MEMBERS: "Hear, hear!"] It is understood on the other side, evidently, that he did mean that. If so, I quite agree. But that seems to be a rather curious ground on which to commend it to a House containing a very considerable majority opposed to hon. Members opposite. However, let that pass. The point with which I am concerned much more than the two hon. Members who last addressed the Committee, is the point made by the Chancellor of the Exchequer that these interlocked and inter-related proposals are intended to relieve the pressure upon the creative faculties of the community. Here I very cordially agree with the Chancellor that this is pre-eminently an object at which, in present circumstances, and indeed in all circumstances, we ought to aim. I believe, with him, that the crushing weight of direct taxation is exercising to-day, and has been exercising for some time past, a most deterrent influence upon the productive activities of the country.

The Chancellor of the Exchequer in his opening speech referred to lack of drive in so many industrial quarters. Is not that lack of drive apparent to everyone who contemplates the present position of industry in this country? Is it not clear that some sort of fillip and encouragement is called for? That is why I feel sure that the Chancellor of the Exchequer is right in the anxiety which he has betrayed in this Budget to give some encouragement to industry. I think that the proposed remission of Income Tax, and, here and now, the proposed remission of Super-tax, will have that effect. Had the matter stopped there, I should have been with the Chancellor of the Exchequer all the way, but I feel that in this matter the Chancellor of the Exchequer has been like hon. Members opposite a little too careful of the individual and careless of the interests of the community at large. In the many speeches which I have inflicted on the House in regard to taxation and finance, I have always tried to keep the community point of view to the front. I cannot help feeling that the Chancellor of the Exchequer in these proposals has been thinking a little too much of the individual taxpayer. In opening the Budget, speaking of this very proposal to diminish Super-tax to certain classes of taxpayers—because, remember, it is only a very limited measure of relief and only applies to a certain class of Super-tax payers—he said: The difference between the highly-paid brain worker, who depends entirely upon the exhaustible products of his brain and whose income depends entirely upon his health, and whose provision for his wife and family depends entirely upon his power to build up insurance funds in his lifetime—the difference between the position of that man and the possessor of an equal income derived from investments is too obvious to need any further discussion."—[OFFICIAL REPORT, 28th April, 1925; col. 85, Vol. 183.] Of course, we all recognise that difference, but I confess I am not with those who only have individual differences in mind. To me it has always been a matter for amazement that the party which holds Socialist principles, which has by its profession special regard for the interests of the community as a whole, should pay such small regard to the interests of the community and should concentrate criticism upon the well-being or hardship to the individual taxpayer. As I have said in regard to this Clause, I find myself in this measure of embarrassment—I should have been perfectly willing had nothing been done in regard to the Death Duties to have left the Super-tax where it is, and I am willing to make this generous offer to hon. Gentlemen opposite. If they will help me to keep the Death Duties as they are at present, I will vote for any Amendment which they may propose at a later stage of this Bill to keep the Super-tax where it is.

Photo of Mr Winston Churchill Mr Winston Churchill , Epping

May I venture very briefly to make an appeal to the Committee to come to an early decision on this question as there are several other important matters yet to be considered.

Photo of Mr Jack Lawson Mr Jack Lawson , Chester-le-Street

So far as I am concerned, I will not stand long between the Committee and a decision. The speech delivered by the hon. Member for York (Sir J. Marriott) sounded strangely like the lectures I used to hear from him 20 years ago. Coming as I did from an industrial district, at that time his lectures did not seem very realistic, but coming as I have come this week-end from the industrial area which I represent his speech sound still more unreal. The hon. Member has just said that we on this side have a strange inability to judge or think of the national position as a whole. I should like to ask how much the hon. Member knows of the national position as a whole. Does he know anything about the position in the mining areas of Durham or South Wales or in some of those areas where you can go to house after house, to street after street, and to colliery after colliery, whole areas that are devastated, where the citizens have lost all hope and are in a state of despair such as men have scarcely dreamed of in our lifetime or in the history of our country? That is why, when the right hon. Gentleman gives remission of taxation to people who already have more wealth than they know what to do with, we feel very strongly and speak strongly, and that is why people are feeling inclined to say and do excessive things and extreme things at a time such as this in the nation's industrial experience.

I want this Committee to look at the situation. I want to give hon. and right hon. Members opposite credit for goodwill just as we have goodwill, for being human just as we are, and also for being kindly and considerate, but I want to ask them to go to South Wales or Durham, where we have had 79 collieries closed down during the past 12 months, where there are 40,000 men idle, the finest type of our citizens, to go into their houses, the houses of men who are moderate, and hear what they say about the remission of taxation of this kind. I do not care how the right hon. Gentleman puts it, whether he says it is put on this or taken off that. All that they know is that, when they are suffering and cannot get employment, the right hon. Gentle- man has handed millions over to people who are already millionaires, and have more wealth than they know what to do with. We hear a good deal and read a good deal in the Press about the Reds. It is not the Reds the Press is afraid of; it is not the Reds that the wealthy classes are afraid of. What they are afraid of is that the patience of the great mass of the workers will become exhausted. Our people have been patient beyond words. We have exhorted them to patience, but our patience is nearly coming to an end, and it is time that this House was relieving people who ought to be relieved, instead of relieving those who have already more than they know what to do with.

Photo of Mr John Tinker Mr John Tinker , Leigh

I want to say to the other side that I accept this part of the Budget as showing clearly the line of demarcation between our side and theirs. I do not agree with the ex-Attorney-General (Sir P. Hastings) in trying to apologise for what he calls the Reds. I want to say to our people exactly where we stand. On the one side, we have remission of taxation for the wealthy, and on the other side it is to be made up by the poorer classes. You are talking about stopping industry, but taxation has to come from somewhere. £800,000,000 has to be found, and where has it to be found? If you remit it from that side, from the wealthy classes, the poorer classes have to pay it, and so I, for one, am quite satisfied with this part of the Budget as showing exactly where we stand. The Chancellor of the Exchequer has shown courage in dealing with the Budget, and he has shown an infinite capacity for doing the wrong thing in a very energetic manner.

The second point is this. It will arouse the attention of our people to the Super-tax payers. I, for one, can understand these people wanting to remain where they are, and not have attention drawn to them. But attention has now been drawn to where the money is, and many people, such as myself, who were not aware of the vast wealth there was, will realise the great source of taxation whenever we get the chance to tax it. With regard to the Death Duties, I would make this suggestion to the Chancellor of the Exchequer. When these estates are left with no direct descendants, where there are no sons or daughters, what is there against taking practically the whole of that estate?

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

The hon. Member must not go into the question of Death Duties on this Clause.

Photo of Mr John Tinker Mr John Tinker , Leigh

I am sorry, but when you were not in the Chair, a Member on the other side was allowed to deal with it, and a speaker on this side said he ought to be allowed to touch upon it also. However, I bow to your ruling.

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

I do not object to a reference to the Death Duties, so long as it is confined to the question of the extent to which these duties are to be increased in parity with the reduction of the Super-tax, but I cannot have the question of Death Duties dealt with in detail.

Photo of Mr John Tinker Mr John Tinker , Leigh

I was only touching upon it, in order to point out that it would be a good source of revenue next time. As has been pointed out on this side, many of our people are suffering in the depths of poverty to-day, and really, if there was to be any relaxation at all, it ought to come to them. I represent miners, like my hon. Friend who has just spoken, and no one who is acquainted with the circumstances can fail to realise that something is wrong. If the right hon. Gentleman had turned his attention to them, instead of to the Super-tax payers, it would have been far better. I hope the Chancellor of the Exchequer will realise the extreme difficulty in which we are being placed by the relaxation of the burden on the Income Tax payers, and not the people whom we represent.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

I, like the previous speaker, and the hon. Member for Chester-le-Street (Mr. Lawson), want to take exception to the way in which this reduction has been made, and also to the arguments that have been put forward urging that reduction. We have been told by Members from the other side of the Committee, as well as from the Chancellor of the Exchequer himself, that this reduction of practically £10,000,000 to the Super-tax payers is a reduction that he has been compelled to make because of the parlous state in which the industries of this country are at the present time, and he has put forward the plea that by reducing the Super-tax, or by giving to the Super-tax payers a remission of £10,000,000 in the next year, he is likely to benefit some of the industries of the country. It is rather a curious position to take up, that he complains about industry being in a very perilous state, when the very figures he himself has placed before the Committee show that a larger number of people are paying Super-tax this year than last year.

There is this other curious circumstance against this argument that industry is in a bad way so far as the heads of it are concerned, namely, that the total amount of taxable income that Super-tax payers are already drawing out of the industries in this and other countries is greater this year than it was last year. The Chancellor of the Exchequer and his supporters say that industry is in such a bad plight in this country that we must give remission to those who have investments in industry. On the other hand, the right hon. Gentleman says that the number of Super-tax payers has increased, and that a larger number of people in this country are able to pay Super-tax on the amount they are drawing, and that the incomes assessable to Super-tax are larger than in any previous year. Because of that, therefore, because they are getting more money, because the number has increased, it is up to us to relieve them of the terrible burdens that they are suffering under at the present time!

For the life of me I cannot see any logic in such an argument as that. As a matter of fact, I am more inclined still to believe that the description given of the Budget when it was first introduced is a correct description. It was said to be a rich man's Budget. But it is not even a rich man's Budget. It is a Super tax payer's Budget—a Budget for remission on incomes that are already swollen. Reference has already been made to the condition of the miners. I come from a district where unemployment during the past two or three years has been very great, due to the outrageous, the idiotic policy introduced and carried out by the Coalition Government, of which the present Chancellor of the Exchequer was a bright and honourable member. [An HON. MEMBER: "Bright?"] Well, I use the word in a comparative sense. The Chancellor understands how I mean it. In the area from which I come scores of thousands of people are unemployed, due to the policy I have mentioned. They are unable to find employment. During the last three years large deductions of wages have been made with the same object that the Chancellor of the Exchequer has said he has in view in giving this remission of taxation; for every cut in wages the argument was that it was on account of the pitiful plight of industry. The miners were told that by accepting reductions in wages they were lessening the burdens upon industry, and that there was little chance of industry reviving, and being able to find better employment, unless they allowed these reductions. In the last three years the workers of this country have submitted to cuts in wages which amount to close upon £600,000,000 per year. The workmen have actually submitted to a reduction of wages of £1,800,000,000, approximately one-fourth of the whole cost of the War as borne by Britain.

These men have submitted to that reduction in wages because they were told it was likely to put industry on its feet. How are you to go to these men, I would ask hon. Members on the other side, and tell them that after the sacrifices they have made by allowing such huge cuts in their wages, by allowing such a large sum to go back into the coffers of the employers of labour—how, I say, can you go to these men in the industrial centres and justify the remission of taxation to people who already, as has been stated, possess more than they know what to do with? I tell you frankly; I tell the Chancellor of the Exchequer that he would not again find a place in this House if he had to go to an industrial constituency and justify his policy. He can go down to Epping Forest. He can come back from Epping Forest as a babe from the wood! [Interruption.] Well, we will cover you with leaves. I state again that if an election were taken in any industrial constituency on the issue Budget versus anti-Budget, the Chancellor of the Exchequer would not find one supporter coming back from any industrial constituency to justify his Budget. [HON. MEMBERS: "Ayr!"] Ayr showed there was a majority against the Budget. The Member who one day this week, I expect, will come to the Bar of this House, comes in on the minority vote of the electors of Ayr. [HON. MEMBERS: "A thousand drop in the poll!"] Yes, but 4,000 drop in the Tory poll. If we are going to have drops, let us have all the drops, and we will find the Tory party have the heaviest drop.

But to get back to the point I was making. I object to a Government, even with the majority that this Government has, carrying through such class legislation as this Budget shows they are intending. With their great majority, and the relay system, they are carrying through their programme under the impression that they are going to delude the workers outside that something is being done for them. Nothing is being done for the workers of this country. The state of industry is worse since the Budget was introduced than prior to that period. Last week there were 60,000 more unemployed, and this week there is a considerable increase in the number. Members opposite who came into the House talking about there being plenty of work for the workers under a Tory Government dare not go back and contest industrial constituencies and make excuses as to why the work has not been found. The Chancellor of the Exchequer, with his varied past, jumping from one theory of politics to another, now comes to this House as a Tory Chancellor of the Exchequer, realising his ambition to become a Chancellor of the Exchequer irrespective of what party he would be Chancellor for. [HON. MEMBERS: "Order!"] I am saying nothing disparaging of the Chancellor. To be Chancellor of the Exchequer is to be one of the highest members of the Government, and to occupy a position like this—

Photo of Lieut-General Edward Fitzroy Lieut-General Edward Fitzroy , Daventry

The hon. Member really must not wander over all those events. It is not a question of the Chancellor of the Exchequer, it is a question of the Super-tax.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

It is the Super-tax that is under review, but the Chancellor of the Exchequer is responsible for it, and in dealing with the Super-tax and the remission of taxation, surely I have the right to touch upon occasions in his past when he was not so solicitous for Super-tax payers? The Chancellor of the Exchequer has come back into this House not as the great democrat which he claimed he was in the past, but he has come here as the protector of the wealthy and not as the protector of the poorer classes. I submit in this Budget that remission of taxation has been given only to the wealthy, and that it has left entirely alone the poorer classes who do pay taxation.

There has been a complete ignoring on the part of the Government of the miserable and despairing lot of scores of thousands of poor people, and the Chancellor of the Exchequer, the Prime Minister, and those who sit behind them have tricked and deluded the workers of the country. They have not only thrown dust in their eyes, but they have also rubbed salt into their sores—[HON. MEMBERS: "Oh, oh!"]—I would like to take some hon. Members who interrupt me to see the misery which is going on, and the conditions under which our poor people are suffering, and I am sure some of those hon. Members would come back much more quickly than they went if they told the poor people that they were voting for a remission of the Super-tax. No Government has a right to remain in office which cannot bring forward some scheme to ameliorate the wretched conditions of the poor, and only come forward with schemes to better their own class and put more wealth into the pockets of those who ought not to have wealth at all, because they have never worked for that wealth.

Photo of Mr Horace Crawfurd Mr Horace Crawfurd , Walthamstow West

The Chancellor of the Exchequer has made an appeal that this Debate should be brought to a speedy close. I think that appeal would have had a better reception if it had not been followed by a speech in which it was perfectly clear what was the general desire of the whole Committee. I desire to associate myself with the speech which has been made by the hon. Member for Peckham (Mr. Dalton) when he said that if the Whips were taken off in the Division on this question the Chancellor of the Exchequer would not carry this proposal at all. During the course of that speech the right hon. Gentleman displayed another of the facets of his dazzling personality when he assumed the part of somebody who feared misrepresentation. He referred to the probable misrepresenta- tion of his action in this matter which would undoubtedly take place all over the country.

One hon. Member referred to the audacity of the right hon. Gentleman, but that does not seem too strong a word to use when we remember the argument of the right hon. Gentleman last Friday in reference to those who were opposing another of his Budget proposals. I think it would be an advantage to this Committee if the right hon. Gentleman could consider these questions simply and solely on their merits without reference to any probable misrepresentation that may or may not be made. It is simply on the merits that I want to draw the attention of hon. Members opposite to what this Clause means. I want to say at once that on these benches we entirely dissociate ourselves from the right hon. Gentleman's contention that this matter can only be considered in conjunction with the increase in the Death Duties. On these benches, like the hon. Members above the Gangway, we believe that questions are raised when we consider the Death Duties which are entirely foreign to the discussion of whether there should or should not be a reduction in the Super-tax. The hon. Member for Chester-le-Street (Mr. Lawson) and the hon. Member who has just spoken both spoke with feeling and conviction about the contrast between the reduction of taxation on the very rich and the position of the very poor. I am not going to develop that point, except to say this, that there are some of us who represent constituencies not associated with particular industries, but still constituencies where there are large numbers of very poor people, and these considerations apply to those constituencies just as they do to specialised constituencies like those represented by the hon. Members.

I want to call the attention of the Committee to the fact that when the right hon. Gentleman introduced these proposals on 28th April, in the course of his financial statement, he said: I believe that the Super-tax at its present rate constitutes an excessive burden both on enterprise and on the saving power of the nation."—[OFFICIAL REPORT. 28th April, 1925; col. 85, Vol. 183.] An hon. and learned Member opposite, in a further quotation, drew attention to a further phrase of the right hon. Gentleman about the creative spirit. If the right hon. Gentleman wishes to help the creative spirit in industry and wishes to help and to lead industry, he is not going the right way about it by relieving the Super-tax payer. He would do very much better to relieve industry where it needs to be relieved most. We have had two or three speeches this evening, all directed to show, and showing, that the great need of industry to-day is not new capital. The great need of industry to-day is first of all lower cost of production and secondly better wages. The right hon. Gentleman would have done very much better if, instead of taking his £10,000,000 of taxation off the Super-tax payer he had relieved industry of the charges which are proposed to be put upon it with reference to the insurance proposals, and had financed the insurance proposals with the money which he is now giving in relief to the Super-tax payer.

Finally, there is one other point to which hon. Members opposite give a lot of lip service outside this House, although they do not back it up by action in this House. This proposal ought not to be made when you have still got an annual Budget of £800,000,000. If you are going to continue expenditure on the War rate, then you must have War rates for Income Tax and Super-tax. I beg to suggest that these considerations, quite apart from the general considerations dealing with the conditions and welfare of the people, tend to show that this proposal has on its merits nothing whatever to commend it.

Photo of Mr Frederick Montague Mr Frederick Montague , Islington West

On the face of it, the remission of Super-tax is an obvious scandal under the circumstances of poverty and oppression under which a large number of people live at the present time. There is an excuse and justification put forward from the other side in favour of this remission upon the grounds that it will stimulate industry and initiative. As that is the one excuse and the only excuse for this particular point in the Budget proposals of the Chancellor of the Exchequer I think that that is a point that ought to be investigated upon the lines of getting down to fundamental considerations in regard to the matter.

As has already been said by a number of speakers in the Debate, industry in this country is not wanting capital. There is no shortage of capital available in this country for industries that show opportunity for making profit. Given the markets and given the profit, capital is available; but I want to know what hon. Members on the other side mean when they talk of initiative being the source of industry and employment in this country. I suggest that that is the fallacy running through the whole of this discussion. Industry does not depend upon initiative or stimulus, except so far as separate industries may be competing against other industries. So far as an industry or business is looked upon as a competitor of another industry or business, initiative, advertising, and all the rest of it, of course, apply, but when you take the industry of the nation as a whole, surely the real thing upon which industry depends is not so much the initiative that has been talked about as the markets that are required in order to sell the goods.

Take the big industries here that are suffering the most depression—the mining industry and the engineering industry. Will any hon. Member on the other side tell me that those industries are suffering depression because the supertaxation of wealthy people has prevented them from saving and employing their wealth in the fructification and initiative required for those industries? Of course not. They are suffering from world competition; they are suffering, obviously, from lack of markets. And what applies to those industries applies to the majority of depressed industries in this country. If you could provide the markets, if you could provide the demand for 50 per cent. more goods than are produced in this country, it seems to be perfectly obvious that the resources of industries in this country would be equal to meeting that demand.

I suggest, therefore, that this excuse is an entire fallacy, and, as it is the only excuse, then, if one can show that it is a fallacy, the idea of remitting the taxation on super-incomes in this country is one that can only rest upon a species of class legislation which the people in the country who are watching the course of the Debates on this Budget understand as nothing less than class legislation with the idea of benefiting wealthy people at the expense of the poor. I say that this Budget has been termed with complete justification a rich man's Budget. The idea that you must levy taxation upon the poor and make more millionaires in order to provide more employment in the country is an entire economic fallacy. The industries of the nation are not suffering from lack of capital. They may be suffering from stagnation of capital, but that is an entirely different matter. That stagnation of capital is due to the general economic conditions of the country, and with regard to foreign trade, and so forth. You are not going to relieve that by allowing extra-wealthy people to retain in their own hands wealth which they are not able to use because the markets are not there, when, at the same time, the wages and conditions of the people are being depressed to such an extent that, with a diminishing foreign market, we are also destroying our home market.

Those seem to me to be fundamental economics of the situation, and that is the reason why the Labour party are opposing this remission of taxation upon people with more money than they know what to do with, with money to burn, while the poor have to pay through the nose for every bit of advantage they may get out of the other proposals of the Budget.

11.0 P.M

Photo of Mr John Beckett Mr John Beckett , Gateshead

I do not intend to join in any kind of appeal to the Chancellor of the Exchequer to think better of these duties. I am certain that any appeal of that sort is now too late. The matter has received his fullest consideration, and in spite of the objection of many Members of his own party, as evinced by their cheering, to the proposals he is making and the necessity under which he is to force them into the Lobby against their will—[Interruption.] It must be so. You cannot cheer proposals against this Clause and then vote for it if you are entirely free agents. These proposals will be of very considerable help to the political forces in the country opposed to the Government. I am not going to get out of order by referring to any change of party the Chancellor has made because, before he changed, his speeches and articles convinced all intelligent men that there was very little difference between the two parties and that change had no effect on his political horizon or on his political outlook. He told us we must consider the Death Duties and the Super-tax proposals as one. I am afraid we on this side, in our endeavours to explain his speech to the electorate, will not be able to take that point of view. These are not normal times. If you had normal times, when everyone was as thoroughly comfortable as the Members of this House are, it might be all right to take the collar off one horse and put it on another. But at a time like this, when you have large numbers of babies, according to the Ministry of Health's Report, dying of starvation every year, there is no convincing reason why any small number of privileged children should come into the world and inherit very large sums. If every child was well looked after automatically there might be a case for inheritance. As it is there is a case for even more drastic steepening up of the Death Duties than has been imposed. Therefore, it is impossible to us to excuse a remission of the Super-tax on the ground that the Death Duties are going to be steepened up. I hope the Chancellor or his successor will increase those duties when they have a further opportunity.

The Super-tax is being reduced at a most difficult time in Parliamentary history, when money is urgently needed. There is hardly an hon. Member on the bench opposite, except those in charge of the fighting services, who is not every day telling us, and telling deputations in his Department: "We are very sorry. Our hearts are full of sympathy with you. If only we had the money we would do something to help you, but we have not the money and we cannot do it." The Prime Minister made an eloquent speech at the opening of the Session, in which the great and drastic need for national economy was impressed upon those of us who went into another place to hear that speech. That may be correct. We may be in need of economy, but not in order that the few people who do not appear to economise a very great deal may enjoy even more wealth than they do at present. According to the estimate of Sir Josiah Stamp, the total post-War wealth of the country is something like £15,000,000,000, out of which £12,000,000,00 is owned by 73,690 people. These are the people, and probably a lesser number, who will enjoy the benefit of the presents which the Chancellor of the Exchequer is going to give them out of public funds. I do not appeal to him to alter it. I do not particularly want him to alter it. I welcome the opportunity, as I believe many other members of my party will welcome it, of going to the country and not only being able to say that the Conservatives are a party of rich men who look after the rich men at the expense of the poor, but of being able to prove the statement up to the hilt by the first Budget which the right hon. Gentleman has made for his party.

Photo of Mr George Garro-Jones Mr George Garro-Jones , Hackney South

I do not—[HON. MEMBERS: "Divide!"] For the consolation of those hon. Members opposite who are always so anxious to get home to their comfortable beds, I do not intend to open the Debate on general principles, but there is one point which I feel constrained to submit for the consideration of the Committee. The Chancellor of the Exchequer pleases some people by saying that this relief in regard to Super-tax is only a transferring of the burden from one part of the body to another where it can be more conveniently carried. He pleases those who are opposing the taxation of rich men by telling them that the relief must be given on the ground that it will be a relief of industry. I do not believe that these reliefs in Super-tax and Income Tax are devoted to industry. I believe that on the very day that these reductions of taxation were announced these rich men felt the money jingling in their pockets. The Chancellor of the Exchequer comes here and paints to us, as he is so able to paint, a picture of rich men saying to each other, "Here is a relief of £500 which our benevolent Chancellor of the Exchequer has given to us. We will have a new machine in the workshop. We will employ another 20 men here or another 10 men there." I believe that is a fantastic picture. These people say, "We will have a new town house." [Laughter.] Hon. Members opposite are amused. I do not suggest that they can buy their town house for £500, but for that amount they can rent one, and keep it empty for half the year. If they do not want another town house, they can have a new shoot in Scotland with the relief that the Chancellor of the Exchequer has given them, or, at the very least, some of the least fortunate of hon. Members opposite can have a 30 guineas or 40 guineas box at Ascot at the expense of the Chancellor of the Exchequer. Speaking in all seriousness, I believe that these reliefs on the Super-tax and Income Tax are a bad thing. To the business man who receives a relief of £500, knowing that it will be re-imposed later on his son, who may have little experience and be anxious to develop the business, I do not believe it is any consolation to know that this relief is going to be given. It is a bad thing, and I believe that the proposal would be rejected by a majority of this Committee if the suggestion of the hon. Member above the Gangway were accepted and the Government Whips taken off and the matter left to a free vote of the Committee.

Photo of Sir Rhys Morris Sir Rhys Morris , Cardiganshire

It would be very interesting to know from the Chancellor of the Exchequer what has prompted him to give this remission of taxation. I have understood that the canons of taxation are that a tax should be certain, that it should be definite and that it should be levied upon those whose shoulders are able to bear it. The Super-tax is a tax which fulfils every one of these three canons. The Report of the Commissioners of Inland Revenue, which has just been issued, shows that in every year from 1913 to 1924 the actual receipts by the Exchequer from this source have exceeded the Budget estimate. In some years they have exceeded the estimate by over £2,000,000, and in no case was the amount of the excess less than £130,000. That shows that in every year the people responsible for the payment of Super-tax were not only able to pay the Super-tax but were able to pay a great deal more than the Chancellor of the Exchequer anticipated. According to the same report, the number of Super-tax payers last year was 89,000, and their aggregate income was £519,000,000. That is an average income of somewhere about £5,000 or £6,000 a year. To these people, earning these huge sums—[HON. MEMBERS: "Getting!"]—getting, receiving these huge incomes, the Chancellor of the Exchequer makes a remission of £10,000,000, that is an average of £110 a year, or a dole of £2 a week, to people who are already in receipt of sums ranging between £5,000 and £6,000 a year. I have heard the Chancellor of the Exchequer condemn the system of doles paid to the unemployed in this country, and yet he makes a remission of £2 a week in favour of 89,000 people in receipt of from £5,000 to £6,000 a year.

Photo of Mr Thomas Johnston Mr Thomas Johnston , Dundee

And no qualifying period.

Photo of Sir Rhys Morris Sir Rhys Morris , Cardiganshire

And no qualifying period. This Budget, with its system of balances, reminds me of Virgil's tree of golden leaves; as soon as a branch was torn off on one side another branch grew elsewhere to replace it. In the case of this Budget a remission of taxation is granted here, and more taxation is put on elsewhere, but the remission is invariably made in favour of those who are well able to pay.

Captain BENN:

I wish to make a remark in reference to the first speech made from these benches, by the right hon. Member for Norwich (Mr. Hilton Young). I had not the opportunity of hearing it, but I understand that he has already said, what I ought to make plain, that he does not represent in any sense whatever the hon. and right hon. Gentlemen on these benches. [HON. MEMBERS: "Do you?" and "Who does?"] The Chancellor of the Exchequer will be in complete sympathy with that point of view. His argument, as I understand it, was something like this, that there was a measure of equity that should be applied to all grades of taxpayers, and that you could not remit to the indirect taxpayer and the direct taxpayer without in equity remitting something to the Super-tax payer. The whole of this discussion, it seems to me, proper to look at in the light of what is the burden that these taxes are intended to discharge. We are not living in ordinary times. We are living in times of an enormous load caused by the War. You must take that into account in considering the remissions of taxation. It always seemed to me during the War that when the bodies of men were conscripted there was a great deal to be said for the conscription of wealth. At the end of the War plans were proposed, and there was a very general measure of agreement as to the principle, for a levy upon War wealth. They were followed by other plans of the Labour party for a general capital levy, the practicability of which has appeared to many people to be a matter of discussion—I will not say more than that. My argument is all based on this same theory. When you remember that there was a poll tax on blood, it is not too much to ask that there should be a tax on wealth.

It must please right hon. and hon. Gentlemen on the Government side to be led by a Chancellor who frankly defends his proposals on the ground that he believes in a Capital Levy. That, I am sure, has already caused increased gratification, which has been manifest in so many speeches. It must also gratify right hon. and hon. Gentlemen opposite to have as Chancellor a man who has taught them that Sir William Harcourt's proposed Death Duties, which they opposed vigorously and an account of which they prophesied the ruin of the country—they now have a Chancellor of the Exchequer who is going to lead them into the Lobby in support of an increase of those Death Duties. Furthermore, they must feel very pleased indeed that the ban proposed by the Patronage Secretary even upon speech, partial attendance and total silence has been lifted; and that they are allowed a little run with an Amendment. But I know that not one right hon. or hon. Gentleman who put this Amendment on the Paper is going to vote for it. Why not? If it be a good Amendment, surely they are not to be terrorised. But, of course, if the Chief Whip would take off his minions and liberate right hon. and hon. Gentlemen to vote on the merits of the case, it is quite likely that this Clause would disappear from the Bill. The Chancellor of the Exchequer has defended it on the ground that it is a balance. He said: "I put less on the Super-tax payer and more on the Death Duties." But he used a very curious phrase, and it is on that that I wish to ask him a question. Turning in defence of this proposal to the distinguished Members of the House who put down this Amendment, he said:

"This is not permanent." What does he mean by that?

Photo of Mr Winston Churchill Mr Winston Churchill , Epping

I did not say anything of the sort.

Captain BENN:

The OFFICIAL REPORT will show.

Photo of Mr Winston Churchill Mr Winston Churchill , Epping

I said that this principle of an increase in the Death Duties, in order to effect a relief to the Super-tax payer, was a principle that I did not consider to be of general and permanent application, that is to say, it was caused only by the circumstances of the present time and by the need of giving psychological stimulus to enterprise. I never said anything remotely resembling the meaning which the hon. and gallant Gentleman has attributed to me.

Captain BENN:

The right hon. Gentleman talks of a "psychological stimulus," but what is exactly meant by saying there is no permanency in the principle. I am afraid it means that, having remitted the tax to the Super-tax payer this year, the right hon. Gentleman will remit it to the payer of Death Duties next year, and that he is only taking advantage of the first year of office, the year most remote from the Election, to do the thing which least commends itself to the electors, namely, to remit the tax to the Super-tax payer Then, the way being clear, he will in the future remit some portion of the heavy burden of Death Duties. There are points which have not been raised so far in the Debate. I do not want to traverse again ground which has been traversed, but the arguments put forward in opposition to this decrease seem to be overwhelming, and I propose to support them in the Lobby.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 264; Noes, 138.

Division No. 155.]AYES.[11.22 p.m.
Acland-Troyte, Lieut.-ColonelBaldwin, Rt. Hon. StanleyBoothtby, R. J. G.
Agg-Gardner, Rt. Hon. Sir James T.Balfour, George (Hampstead)Bourne, Captain Robert Croft.
Ainsworth, Major CharlesBalniel, LordBowater, Sir T. Vansittart
Albery, Irving JamesBanks, Reginald MitchellBowyer, Capt. G. E. W.
Alexander, Sir Wm. (Glasgow, Cent'l)Barclay-Harvey, C. M.Boyd-Carpenter, Major A.
Allen, J. Sandeman (L'pool, W. Derby)Barnett, Major Sir RichardBriggs, J. Harold
Amery, Rt. Hon. Leopold C. M. S.Barnston, Major Sir HarryBriscoe, Richard George
Applin, Colonel R. V. K.Beamish, Captain T. P. H.Brocklebank, C. E. R.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W.Betterton, Henry B.Brooke, Brigadier-General C. R. I.
Ashmead-Bartlett, E.Birchall, Major J. DearmanBroun-Lindsay, Major H.
Astor, Maj. Hn. John J. (Kent, Dover)Blades, Sir George RowlandBrown, Maj. D. C. (N'th'l'd., Hexham)
Atholl, Duchess ofBlundell, F. N.Buckingham, Sir H.
Bull, Rt. Hon. Sir William JamesHartington, Marquess ofPercy, Lord Eustace (Hastings)
Burman, J. B.Harvey, G. (Lambeth, Kennington)Perkins, Colonel E. K.
Butler, Sir GeoffreyHarvey, Major S. E. (Devon, Totnes)Perring, William George
Cadogan, Major Hon. EdwardHaslam, Henry C.Peto, G. (Somerset, Frome)
Campbell, E. T.Hawke, John AnthonyPhilipson, Mabel
Cautley, Sir Henry S.Henderson, Capt. R. R. (Oxf'd, Henley)Pielou, D. P.
Cayzer, Sir C. (Chester, City)Henn, Sir Sydney H.Power, Sir John Cecil
Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)Hennessy, Major J. R. G.Pownall, Lieut.-Colonel Assheton
Chadwick, Sir Robert BurtonHenniker-Hughan, Vice-Adm. Sir A.Preston, William
Christie, J. A.Herbert, Dennis (Hertford, Watford)Price, Major C. W. M.
Churchill, Rt. Hon. Winston SpencerHerbert, S. (York, N. R., Scar. & Wh'by)Radford, E. A.
Churchman, Sir Arthur C.Hilton, CecilRamsden, E.
Clarry, Reginald GeorgeHoare, Lt.-Col. Rt. Hon. Sir S. J. G.Reid, Captain A. S. C. (Warrington)
Clayton, G. C.Hogg, Rt. Hon. Sir D. (St. Marylebone)Reid, D. D. (County Down)
Cobb, Sir CyrilHohler, Sir Gerald FitzroyRemer, J. R.
Cochrane, Commander Hon. A. D.Holbrook, Sir Arthur RichardRhys, Hon. C. A. U.
Cohen, Major J. BrunelHolland, Sir ArthurRice, Sir Frederick
Cooper, A. DuffHolt, Capt. H. P.Robinson, Sir T. (Lancs., Stretford)
Cope, Major WilliamHope, Capt. A. O. J. (Warw'k, Nun.)Ruggles-Brise, Major E. A.
Couper, J. B.Hopkins, J. W. W.Russell, Alexander West (Tynemouth)
Courtauld, Major J. S.Horne, Rt. Hon. Sir Robert S.Rye, F. G.
Croft, Brigadier-General Sir H.Howard, Captain Hon. DonaldSalmon, Major I.
Crook, C. W.Hudson, Capt. A. U. M. (Hackney, N.)Samuel, A. M. (Surrey, Farnham)
Crookshank, Col. C. de W. (Berwick)Hudson, R. S. (Cumberl'nd, Whiteh'n)Samuel, Samuel (W'dsworth, Putney)
Crookshank, Cpt. H. (Lindsey, Gainsbro)Hume, Sir G. H.Sandeman, A. Stewart
Cunliffe, Joseph HerbertHunter-Weston, Lt.-Gen. Sir AylmerSanders, Sir Robert A.
Curzon, Captain ViscountHuntingfield, LordSassoon, Sir Philip Albert Gustave D.
Dalkeith, Earl ofHurd, Percy A.Savery, S. S.
Dalziel, Sir DavisonInskip, Sir Thomas Walker H.Shaw, R. G. (Yorks, W. R., Sowerby)
Davidson, J. (Hertf'd, Hemel Hempst'd)Jackson, Lieut.-Colonel Hon. F. S.Shaw, Capt. W. W. (Wilts, Westb'y)
Davidson, Major-General Sir John H.Jackson, Sir H. (Wandsworth, Cen'l)Sheffield, Sir Berkeley
Davies, A. V. (Lancaster, Royton)Jacob, A. E.Shepperson, E. W.
Davies, Maj. Geo. F. (Somerset, Yeovil)Jephcott, A. R.Skelton, A. N.
Davies, Sir Thomas (Cirencester)Jones, G. W. H. (Stoke Newington)Slaney, Major P. Kenyon
Davison, Sir W. H. (Kensington, S.)Kidd, J. (Linilthgow)Smith, R. W. (Aberd'n & Kinc'dine, C.)
Dean, Arthur WellesleyKindersley, Major G. M.Smith-Carington, Neville W.
Dixey, A. C.Kinloch-Cooke, Sir ClementSmithers, Waldron
Doyle, Sir N. GrattanLamb, J. Q.Somerville, A. A. (Windsor)
Drewe, C.Lane-Fox, Lieut.-Col. George R.Sprot, Sir Alexander
Eden, Captain AnthonyLeigh, Sir John (Clapham)Stanley, Col. Hon. G. F. (Will'sden, E.)
Edmondson, Major A. J.Lister, Cunliffe-. Rt. Hon. Sir PhilipStanley, Lord (Fylde)
Elliot, Captain Walter E.Little, Dr. E. GrahamSteel, Major Samuel Strang
Erskine, Lord (Somerset, Weston-s-M.)Locker-Lampson, Com. O. (Handsw'th)Strickland, Sir Gerald
Everard, W. LindsayLooker, Herbert WilliamStuart, Hon. J. (Moray and Nairn)
Fairfax, Captain J. G.Lord, Walter Greaves-Sueter, Rear-Admiral Murray Fraser
Falle, Sir Bertram G.Luce, Major-Gen. Sir Richard HarmanSugden, Sir Wilfrid
Fanshawe, Commander G. D.Lumley, L. R.Tasker, Major R. Inigo
Fermoy, LordMacdonald, Capt. P. D. (I.of W.)Templeton, W. P.
Fielden, E. B.Macdonald, R. (Glasgow, Cathcart)Thompson, Luke (Sunderland)
Finburgh, S.McDonnell, Colonel Hon. AngusThomson, F. C. (Aberdeen, South)
Fleming, D. P.Macintyre, IanThomson, Sir W. Mitchell (Croydon, S.)
Ford, P. J.McLean, Major A.Tinne, J. A.
Forestier-Walker, Sir L.MacRobert, Alexander M.Tichfield, Major the Marquess of
Forrest, W.Malone, Major P. B.Tryon, Rt. Hon. George Clement
Foster, Sir Harry S.Manningham-Buller, Sir MervynWallace, Captain D. E.
Foxcroft, Captain C. T.Margesson, Captain D.Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Fraser, Captain IanMarriott, Sir J. A. R.Warner, Brigadier-General W. W.
Fremantle, Lieut.-Colonel Francis E.Mason, Lieut.-Col. Glyn K.Warrender, Sir Victor
Gadie, Lieut.-Col. AnthonyMilne, J. S. Wardlaw-Watson, Sir F. (Pudsey and Otley)
Ganzoni, Sir JohnMitchell, S. (Lanark, Lanark)Wells, S. R.
Gates, PercyMitchell, W. Foot (Saffron Walden)Wheler, Major Sir Granville C.
Gault, Lieut.-Col. Andrew HamiltonMitchell, Sir W. Lane (Streatham)Williams, Com. C. (Devon, Torquay)
Gee, Captain R.Moore, Sir Newton J.Williams, Herbert G. (Reading)
Gilmour, Lt.-Col. Rt. Hon. Sir JohnMoore-Brabazon, Lieut.-Col. J. T. C.Wilson, Sir C. H. (Leeds, Central)
Glyn, Major R. G. C.Moreing, Captain A. H.Winterton, Rt. Hon. Earl
Goff, Sir ParkMorrison, H. (Wilts, Salisbury)Wise, Sir Fredric
Grant, J. A.Morrison-Bell, Sir Arthur CliveWood, B. C. (Somerset, Bridgwater)
Greene, W. P. CrawfordNelson, Sir FrankWood, Rt. Hon. E. (York, W. R., Ripon)
Grotrian, H. BrentNeville, R. J.Wood, E. (Chest'r, Stalyb'dge & Hyde)
Guest, Capt. Rt. Hon. F. E. (Bristol, N.)Newman, Sir R. H. S. D. L. (Exeter)Wood, Sir Kingsley (Woolwich, W.).
Guinness, Rt. Hon. Walter E.Nield, Rt. Hon. Sir HerbertWood, Sir S. Hill- (High Peak)
Hacking, Captain Douglas H.Nuttall, EllisWoodcock, Colonel H. C.
Hall, Lieut.-Col. Sir F. (Dulwich)Oakley, T.Worthington-Evans, Rt. Hon. Sir L.
Hall, Capt. W. D'A. (Brecon & Rad.)O'Connor, T. J. (Bedford, Luton)Young, E. Hilton (Norwich)
Hanbury, C.O'Neill, Major Rt. Hon. Hugh
Harland, A.Ormsby-Gore, Hon. WilliamTELLERS FOR THE AYES.
Harrison, G. J. C.Pennefather, Sir JohnCommander Eyres Monsell and
Colonel Gibbs.
Adamson, Rt. Hon. W. (Fife, West)Ammon, Charles GeorgeBarker, G. (Monmouth, Abertillery)
Adamson, W. M. (Staff., Cannock)Attlee, Clement RichardBarnes, A.
Alexander, A. V. (Sheffield, Hillsbro')Baker, J. (Wolverhampton, Bilston)Barr, J.
Batey, JosephHayday, ArthurSalter, Dr. Alfred
Beckett, John (Gateshead)Henderson, Rt. Hon. A. (Burnley)Scrymgeour, E.
Benn, Captain Wedgwood (Leith)Henderson, T. (Glasgow)Shiels, Dr. Drummond
Bowerman, Rt. Hon. Charles W.Hirst, G. H.Short, Alfred (Wednesbury)
Broad, F. A.Hirst, W. (Bradford, South)Simon, Rt. Hon. Sir John
Bromley, J.Hudson, J. H. (Huddersfield)Sinclair, Major Sir A. (Caithness)
Charleton, H. C.Hutchison, Sir Robert (Montrose)Sitch, Charles H.
Clowes, S.Jenkins, W. (Glamorgan, Neath)Slesser, Sir Henry H.
Cluse, W. S.John, William (Rhondda, West)Smillie, Robert
Collins, Sir Godfrey (Greenock)Johnston, Thomas (Dundee)Smith, Ben (Bermondsey, Rotherhithe)
Compton, JosephJones, Henry Haydn (Merioneth)Snell, Harry
Connolly, M.Jones, J. J. (West Ham, Silvertown)Snowden, Rt. Hon. Philip
Cove, W. G.Jones, Morgan (Caerphilly)Stamford, T. W.
Cowan, D. M. (Scottish Universities)Kelly, W. T.Stephen, Campbell
Crawfurd, H. E.Kennedy, T.Sutton, J. E.
Dalton, HughKirkwood, D.Thomas, Rt. Hon. James H. (Derby)
Davies, Rhys John (Westhoughton)Lansbury, GeorgeThomas, Sir Robert John (Anglesey)
Day, Colonel HarryLawson, John JamesThomson, Trevelyan (Middlesbro, W.)
Duncan, C.Livingstone, A. M.Thorne, G. R. (Wolverhampton, E.)
Dunnico, H.Lowth, T.Thurtle, E.
England, Colonel A.Lunn, WilliamTinker, John Joseph
Evans, Capt. Ernest (Welsh Univer.)MacDonald, Rt. Hon. J. R.(Aberavon)Trevelyan, Rt. Hon. C. P.
Fenby, T. D.Mackinder, W.Varley, Frank B.
Garro-Jones, Captain G. M.MacLaren, AndrewViant, S. P.
George, Rt. Hon. David LloydMaclean, Neil (Glasgow, Govan)Warne, G. H.
Gibbins, JosephMarch, S.Watson, W. M. (Dunfermline)
Gillett, George M.Maxton, JamesWatts-Morgan, Lt.-Col. D. (Rhondda)
Gosling, HarryMontague, FrederickWelsh, J. C
Graham, D. M. (Lanark, Hamilton)Morris, R. H.Westwood, J.
Graham, Rt. Hon. Wm. (Edin., Cent.)Morrison, R. C. (Tottenham, N.)Wheatley, Rt. Hon. J.
Greenall, T.Murnin, H.Whiteley, W.
Greenwood, A. (Nelson and Colne)Naylor, T. E.Williams, C. P. (Denbigh, Wrexham)
Grenfell, D. R. (Glamorgan)Palin, John HenryWilliams, David (Swansea, East)
Griffiths, T. (Monmouth, Pontypool)Paling, W.Williams, Dr. J. H. (Llanelly)
Groves, T.Pethick-Lawrence, F. W.Williams, T. (York, Don Valley)
Grundy, T. W.Ponsonby, ArthurWilson, C. H. (Sheffield, Attercliffe)
Guest, J. (York, Hemsworth)Potts, John S.Wilson, R. J. (Jarrow)
Guest, Dr. L. Haden (Southwark, N.)Rees, Sir BeddoeWindsor, Walter
Hall, F. (York, W. R., Normanton)Richardson, R. (Houghton-le-Spring)Wright, W.
Hall, G. H. (Merthyr Tydvil)Riley, BenYoung, Robert (Lancaster, Newton)
Hamilton, Sir R. (Orkney & Shetland)Ritson, J.
Hardie, George D.Robertson, J. (Lanark, Bothwell)TELLERS FOR THE NOES.
Harris, Percy A.Robinson, W. C. (Yorks, W. R., Elland)Mr. Allen Parkinson and Mr.
Hartshorn, Rt. Hon. VernonRose, Frank H.Charles Edwards.
Hastings, Sir Patrick