I beg to move, to leave out from the word "tax" in line 4 to the word "were" in line 5.
The effect of this Amendment would be to omit the words
(other than the last such reference in Sub-section (9) of the said section).
I move this Amendment in order to call attention to the extraordinarily unsatisfactory drafting of this Resolution. If hon. Members will turn up Section 32 of the Income Tax Act, 1918, they will observe that the words "standard rate" do not occur anywhere in that Section, and, secondly, that the Section contains only seven Sub-sections and not nine, as stated. I must say when I first saw this Resolution and read the Section that I was under the impression that there had been a misprint, and that the right hon. Gentleman intended to refer to the provisos in Sub-section (3). Since the House met this afternoon it has been brought to my notice that the right hon. Gentleman is proposing an amendment of the Income Tax Act, 1918, which takes the place of Section 24 of the Finance Act, 1920. It is difficult enough for ordinary Members of the House to understand when reference is made to an amended section of the Act, but I submit that when Resolutions of this kind are put on the Order Paper, they should be put down in such a way that hon. Members of this House can understand them.
When the Chancellor of the Exchequer refers to an amending Section, I think that the least he can possibly do is to make the Resolution slightly more intelligible, and he should direct attention to the fact that he is dealing not with the original Section of the Act of 1918, but with that Section as amended by another Section of the Act of 1920. I know that the Chancellor of the Exchequer has some extremely able experts to consult on this subject, but I should like to point out that there is nothing in this Resolution to indicate that if you want to understand it you must refer to Section 24 of the Act of 1920. I wish emphatically to protest against this method of so drafting Resolutions that they are utterly unintelligible to those who take an interest in the work of this House. If the Government survive to bring in any more Finance Bills I trust that when they are dealing with an amending Act, they will have the kindness and courage to refer to that fact in the Resolution.
In so far as the question of the drafting of this Resolution arises to which the hon. and gallant Member for Oxford (Captain Bourne) has referred, I will have the matter looked into. I gather that the hon. and gallant Member is not objecting to this Resolution in substance, and I do not know whether he wishes me to deal only with the technical point which he has raised.
The object of the Sixth Resolution as a whole is not raised by this Amendment. The object of this Resolution is to reduce the allowance given in relief from Income Tax in respect of life insurance premiums in order to bring them into line with the reduction which is going to be made in the Finance Bill in which, instead of the first £225, in future £250 will be subject not to the half rate but to 2s. in the £. It is because of that that we are proposing to deal with life insurance premiums on the same principle. It will be seen that life insurance premiums would have been considerably benefited by this proposal, whereas the intention is to keep them as they are at the present time. The Amendment which has been moved by the hon. and gallant Member for Oxford deals with the words
(other than the last such reference in Sub-section (9) of the said section).
The Income Tax Act, 1918, as amended, contains those words in Sub-section (9), which I do not think it is necessary for me to read because it is very complicated. The Acts relating to the relief from Income Tax in respect of life insurance premiums are dealt with in this Resolution, and it deals with those insurance premiums taken out before 1916 and those taken out after 1916.
This particular Sub-section to which the hon. and gallant Member for Oxford referred deals with persons whose life insurance premiums were taken out before the year 1916 and it makes certain allowances in the case of persons with incomes below £1,000 between £1,000 and £2,000 and incomes exceeding £2,000. If the provision in the Sub-section had not been made there would be certain jumps and in consequence of that a person who for example had just under £2,000 income would be actually paying more tax than a person on the other side of the margin. In order to put that right it was necessary to bring in Sub-section (9) to which the Amendment refers in order to make the passage over the margin a smooth one instead of proceeding by a jump. If the Amendment were carried the principle underlying this Sub-section would be upset and therefore it is proposed to keep the amount at 4s. 6d. which is the standard rate so far as that Sub-section is concerned while altering the standard rate to 4s. for the general purposes of the Resolution. I hope that I have made that point clear.
My hon. and gallant Friend moved the Amendment in order to get from the Government an undertaking "not to do it again." What the Government have done in the Resolution is to refer to the Act of 1918, but they have not referred to the Act of 1920, which amended the Act of 1918. They have thus given to every Member who has tried to find out what the Government are proposing an immense amount of quite unnecessary trouble. My hon. and gallant Friend spent hours this morning in trying to find out what it was that the Government intended to amend. The Resolution refers to the Act of 1918. It is not the Act of 1918 only that is dealt with; it is the Act of 1918 as amended by the Act of 1920. I now ask the Government to say that this is an undesirable practice that they are adopting and that they will not do it again. That is the least the Government can do for the sake of our Debates and in the interests of every Member of the House. The Financial Secretary to the Treasury dealt with the merits of the Resolution. As I understand the Resolution it is intended to prevent certain taxpayers who have now to pay a 4s. 6d. in the £ tax from getting the benefit of the insurance premium that they pay by way of deduction from their income, and therefore freeing those insurance premiums of the 4s. 6d. tax. These people are not to have 4s. 6d. relief although they pay 4s. 6d. Income Tax, but 4s. relief.
Then is it half? Does it mean that instead of having 2s. 3d. relief, in the case of those who are entitled to deduct half the amount of the tax, they are in future to deduct only 2s., although they pay 2s. 3d.? If it is not so I shall be glad to be informed.
I never saw the Amendment until about five minutes ago. The hon. and gallant Member who moved it made some complaint about the framing of the Resolution and its reference to the Act of 1918; and then the right hon. Gentleman who has just spoken stated that the Act of 1918 was amended by the Act of 1920. I am informed that the Resolution is drafted in the usual form in referring to the principal Act. In the Finance Bill reference will be made to the amending of that 1918 Act.
On that point of Order, it is not a question of the correctness of the phrase in the Resolution, but whether it is the most suitable phrase for the convenience of Members of this House. I submit that the phrase used is perfectly correct to cover the point, and that it is the usual method adopted in a Resolution of this kind. In the Finance Bill it is elaborated for the convenience of Members. There is nothing inconsistent with giving a wider explanation in the Finance Bill, but there is a narrower and more technical form in the Resolution.
Is that so? We are now altering the provisions of the Act of 1920. I do not want to be polemical, but let us be clear. We are altering something in the Act of 1920, yet here it says in plain black and white that we are altering something in the Act of 1918. I submit that we ought not to proceed further until a reference to the Act of 1920 is inserted.
|Division No. 271.]||AYES.||[4.10 p.m.|
|Adamson, Rt. Hon. W. (Fife, West)||Daggar, George||Hamilton, Sir R. (Orkney & Zetland)|
|Adamson, W. M. (Staff., Cannock)||Dallas, George||Hardie, George D.|
|Addison, Rt. Hon. Dr. Christopher||Davies, Rhys John (Westhoughton)||Harris, Percy A.|
|Altchison, Rt. Hon. Craigle M.||Day, Harry||Hastings, Dr. Somerville|
|Alexander, Rt. Hon. A. V. (Hillsbro')||Denman, Hon. R. D.||Haycock, A. W.|
|Alpass, J. H.||Dickson, T.||Hayday, Arthur|
|Arnott, John||Dukes, C.||Hayes, John Henry|
|Ayles, Walter||Ede, James Chuter||Henderson, Thomas (Glasgow)|
|Baker, John (Wolverhampton, Bilston)||Edmunds, J. E.||Henderson, W. W. (Middx., Enfield)|
|Baldwin, Oliver (Dudley)||Edwards, C. (Monmouth, Bedwellty)||Herriotts, J.|
|Barnes, Alfred John||Edwards, E. (Morpeth)||Hirst, G. H. (York W. R. Wentworth)|
|Barr, James||Egan, W. H.||Hirst, W. (Bradford, South)|
|Batey, Joseph||Elmley, Viscount||Hoffman, P. C.|
|Bellamy, Albert||England, Colonel A.||Hollins, A.|
|Benn, Rt. Hon. Wedgwood||Foot, Isaac||Hopkin, Daniel|
|Bennett, Captain E. N. (Cardiff, Central)||Freeman, Peter||Horrabin, J. F.|
|Benson, G.||Gardner, B. W. (West Ham, Upton)||Hudson, James H. (Huddersfield)|
|Bevan, Aneurin (Ebbw Vale)||Gardner, J. P. (Hammersmith, N.)||Hunter, Dr. Joseph|
|Blindell, James||George, Major G. Lloyd (Pembroke)||Hutchison, Maj.-Gen. Sir R.|
|Bondfield, Rt. Hon. Margaret||Gibbins, Joseph||Isaacs, George|
|Bowerman, Rt. Hon. Charles W.||Gibson, H. M. (Lancs, Mossley)||Jenkins, W. (Glamorgan, Neath)|
|Broad, Francis Alfred||Gill, T. H.||John, William (Rhondda, West)|
|Brockway, A. Fenner||Gillett, George M.||Jones, F. Llewellyn- (Flint)|
|Bromley, J.||Glassey, A. E.||Jones, Henry Haydn (Merioneth)|
|Brooke, W.||Gossling, A. G.||Jones, J. J. (West Ham, Silvertown)|
|Brown, Rt. Hon. J. (South Ayrshire)||Gould, F.||Jones, Morgan (Caerphilly)|
|Burgess, F. G.||Graham, D. M. (Lanark, Hamll'on)||Jones, T. I. Mardy (Pontypridd)|
|Buxton, C. R. (Yorks, W. R. Elland)||Graham, Rt. Hon. Wm. (Edin., Cent.)||Jowett, Rt. Hon. F. W.|
|Caine, Derwent Hall.||Granville, E.||Jowitt, Rt. Hon. Sir W. A.|
|Cameron, A. G.||Gray, Milner||Kennedy, Thomas|
|Cape, Thomas||Greenwood, Rt. Hon. A. (Colne)||Kenworthy, Lt.-Com. Hon. Joseph M.|
|Carter, W. (St. Pancras, S. W.)||Griffith, F. Kingsley (Middlesbro' W.)||Kinley, J.|
|Chater, Danlel||Griffiths, T. (Monmouth, Pontypool)||Knight, Holford|
|Church, Major A. G.||Groves, Thomas E.||Lambert, Rt. Hon. George (S. Molton)|
|Cluse, W. S.||Grundy, Thomas W.||Lang, Gordon|
|Cocks, Frederick Seymour||Hall, F. (York, W. R., Normanton)||Lansbury, Rt. Hon. George|
|Compton, Joseph||Hall, Capt. W. P. (Portsmouth, C.)||Lathan, G.|
|Cowan, D. M.||Hamilton, Mary Agnes (Blackburn)||Law, A. (Rossendale)|
|Lawrence, Susan||Owen, Major G. (Carnarvon)||Snowden, Rt. Hon. Philip|
|Lawson, John James||Owen, H. F. (Hereford)||Snowden, Thomas (Accrington)|
|Lawther, W. (Barnard Castle)||Palin, John Henry||Sorensen, R.|
|Leach, W.||Perry, S. F.||Stamford, Thomas W.|
|Lee, Frank (Derby, N. E.)||Pethick-Lawrence, F. W.||Stewart, J. (St. Rollox)|
|Lee, Jennie (Lanark, Northern)||Phillips, Dr. Marlon||Strachey, E. J. St. Loe|
|Lees, J.||Picton-Turbervill, Edith||Strauss, G. R.|
|Lindley, Fred W.||Pole, Major D. G.||Sullivan, J.|
|Lloyd, C. Ellis||Potts, John S.||Taylor, W. B. (Norfolk, S. W.)|
|Logan, David Gilbert||Price, M. P.||Thomas, Rt. Hon. J. H. (Derby)|
|Longbottom, A. W.||Quibell, D. F. K.||Thorne, W. (West Ham, Plaistow)|
|Longden, F.||Ramsay, T. B. Wilson||Thurtle, Ernest|
|Lunn, William||Raynes, W, R.||Tillett, Ben|
|McEntee, V. L.||Richardson, R. (Houghton-le-Spring)||Tinker, John Joseph|
|Mackinder, W.||Riley, Ben (Dewsbury)||Trevelyan, Rt. Hon. Sir Charles|
|McKinlay, A.||Riley, F. F. (Stockton-on-Tees)||Turner, B.|
|MacLaren, Andrew||Ritson, J.||Vaughan, D. J.|
|Maclean, Neil (Glasgow, Govan)||Roberts, Rt. Hon. F. O. (W. Bromwich)||Viant, S. P.|
|MacNeill-Weir, L.||Romeril, H. G.||Walkden, A. G.|
|Macpherson, Rt. Hon. James I.||Rosbotham, D. S. T.||Walker, J.|
|McShane, John James||Rothschild, J. de||Watkins, F. C.|
|Malone, C. L'Estrange (N'thampton)||Rowson, Guy||Watson, W. M. (Dunfermline)|
|Mansfield, W.||Salter, Dr. Alfred||Wedgwood, Rt. Hon. Josiah|
|March, S.||Samuel, H. W. (Swansea, West)||Wellock, Wilfred|
|Markham, S. F.||Sanders, W. S.||Welsh, James (Paisley)|
|Marley, J.||Sandham, E.||Welsh, James C. (Coatbridge)|
|Marshall, Fred||Sawyer, G. F.||West, F. R.|
|Mathers, George||Scurr, John||Westwood, Joseph|
|Matters, L. W.||Shakespeare, Geoffrey H.||Wheatley, Rt. Hon. J.|
|Melville, Sir James||Shaw, Rt. Hon. Thomas (Preston)||Whiteley, Wilfrid (Blrm., Ladywood)|
|Messer, Fred||Shepherd, Arthur Lewis||Whiteley, William (Blaydon)|
|Millar, J. D.||Sherwood, G. H.||Wilkinson, Ellen C.|
|Montague, Frederick||Shield, George William||Williams, David (Swansea, East)|
|Morley, Ralph||Shiels, Dr. Drummond||Wilson, C. H. (Sheffield, Attercliffe)|
|Morris, Rhys Hopkins||Shillaker, J. F.||Wilson, J. (Oldham)|
|Morris-Jones, Dr. J. H. (Denbigh)||Shinwell, E.||Wilson, R. J. (Jarrow)|
|Morrison, Herbert (Hackney, South)||Short, Alfred (Wednesbury)||Winterton, G. E. (Leicester, Loughb'gh)|
|Morrison, Robert C. (Tottenham, N.)||Simmons, C. J.||Wise, E. F.|
|Mort, D. L.||Simon. E. D. (Manch'ter, Withington)||Wood, Major McKenzie (Banff)|
|Moses, J. J. H.||Sinclair, Sir A. (Caithness)||Wright, W. (Rutherglen)|
|Mosley, Lady C. (Stoke-on-Trent)||Sinkinson, George||Young, R. S. (Islington, North)|
|Muff, G.||Smith, Alfred (Sunderland)|
|Murnin, Hugh||Smith, Ben (Bermondsey, Rotherhithe)||TELLERS FOR THE AYES.—|
|Nathan, Major H. L.||Smith, Frank (Nuneaton)||Mr. Allen Parkinson and Mr.|
|Newman, Sir R. H. S. D. L. (Exeter)||Smith, H. B. Lees- (Keighley)||Paling.|
|Oldfield, J. R.||Smith, Tom (Pontefract)|
|Acland-Troyte, Lieut.-Colonel||Davies, Dr. Vernon||James, Lieut.-Colonel Hon. Cuthbert|
|Allen, Sir J. Sandeman (Liverp'l., W.)||Davies, Maj. Geo. F. (Somerset, Yeovil)||King, Commodore Rt. Hon. Henry D.|
|Ashley, Lt.-Col. Rt. Hon. Wilfrid W.||Davison, Sir W. H. (Kensington, S.)||Knox, Sir Alfred|
|Astor, Viscountess||Dugdale, Capt. T. L.||Lamb, Sir J. Q.|
|Atholl, Duchess of||Eden, Captain Anthony||Law, Sir Alfred (Derby, High Peak)|
|Baillie-Hamilton, Hon. Charles W.||Edmondson, Major A. J.||Leighton, Major B. E. P.|
|Baldwin, Rt. Hon. Stanley (Bewdley)||Elliot, Major Walter E.||Llewellin, Major J. J.|
|Beamish, Rear-Admiral T. P. H.||Erskine, Lord (Somerset, Weston-s-M.)||Locker-Lampson, Rt. Hon. Godfrey|
|Beaumont, M. W.||Everard, W. Lindsay||Lymington, Viscount|
|Betterton, Sir Henry B.||Falle, Sir Bertram G.||McConnell, Sir Joseph|
|Bird, Ernest Roy||Ferguson, Sir John||Macquisten, F. A.|
|Bourne, Captain Robert Croft||Fison, F. G. Clavering||MacRobert, Rt. Hon. Alexander M.|
|Bowater, Col. Sir T. Vansittart||Forestler-Walker, Sir L.||Margesson, Captain H. D.|
|Bowyer, Captain Sir George E. W.||Ganzoni, Sir John||Marjoribanks, E. C.|
|Bracken, B.||Gault, Lieut.-Col. Andrew Hamilton||Mitchell, Sir W. Lane (Streatham)|
|Briscoe, Richard George||Gilmour, Lt.-Col. Rt. Hon. Sir John||Monsell, Eyres, Com. Rt. Hon. Sir B.|
|Brown, Brig.-Gen. H. C. (Berks, Newb'y)||Glyn, Major R. G. C.||Morrison, W. S. (Glos., Cirencester)|
|Buchan, John||Graham, Fergus (Cumberland, N.)||Muirhead, A. J.|
|Buckingham, Sir H.||Grattan-Doyle, Sir N.||Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)|
|Bullock, Captain Malcolm||Gunston, Captain D. W.||O'Neill, Sir H.|
|Castle Stewart, Earl of||Hall, Lieut.-Col. Sir F. (Dulwich)||Ormsby-Gore, Rt. Hon. William|
|Cautley, Sir Henry S.||Hammersley, S. S.||Peake, Capt. Osbert|
|Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)||Hanbury, C.||Peto, Sir Basil E. (Devon, Barnstaple)|
|Chamberlain, Rt. Hon. N. (Edgbaston)||Hannon, Patrick Joseph Henry||Pownall, Sir Assheton|
|Chapman, Sir S.||Haslam, Henry C.||Preston, Sir Walter Rueben|
|Christie, J. A.||Henderson, Capt. R. R. (Oxf'd, Henley)||Ramsbotham, H.|
|Churchill, Rt. Hon. Winston Spencer||Hennessy, Major Sir G. R. J.||Remer, John R.|
|Cockerill, Brig.-General Sir George||Hills, Major Rt. Hon. John Waller||Rentoul, Sir Gervals S.|
|Cohen, Major J. Brunel||Hope, Sir Harry (Forfar)||Roberts, Sir Samuel (Ecclesall)|
|Colfox, Major William Philip||Horne, Rt. Hon. Sir Robert S.||Ross, Major Ronald D.|
|Colville, Major D. J.||Howard-Bury, Colonel C. K.||Ruggles-Brise, Lieut.-Colonel E. A.|
|Courthope, Colonel Sir G. L.||Hudson, Capt. A. U. M. (Hackney, N.)||Russell, Alexander West (Tynemouth)|
|Cranborne, Viscount||Hunter-Weston, Lt.-Gen. Sir Aylmer||Salmon, Major I.|
|Crookshank, Cpt. H. (Lindsey, Gainsbro)||Hurd, Percy A.||Samuel, A. M. (Surrey, Farnham)|
|Dalrymple-White, Lt.-Col. Sir Godfrey||Hurst, Sir Gerald B.||Sandeman, Sir N. Stewart|
|Savery, S. S.||Tinne, J. A.||Windsor-Clive, Lieut.-Colonel George|
|Skelton, A. N.||Titchfield, Major the Marquess of||Winterton, Rt. Hon. Earl|
|Smith, Louis W. (Sheffield, Hallam)||Todd, Capt. A. J.||Womersley, W. J.|
|Smithers, Waldron||Train, J.||Wood, Rt. Hon. Sir Kingsley|
|Spender-Clay, Colonel H.||Vaughan-Morgan, Sir Kenyon||Worthington-Evans, Rt. Hon. Sir L.|
|Stanley, Lord (Fylde)||Wardlaw-Milne, J. S.|
|Steel-Maitland, Rt. Hon. Sir Arthur||Warrender, Sir Victor||TELLERS FOR THE NOES.—|
|Stuart, Hon. J. (Moray and Nairn)||Waterhouse, Captain Charles||Sir George Penny and Captain|
|Sueter, Rear-Admiral M. F.||Wells, Sydney R.||Wallace.|
On a point of Order, arising out of the point that I put earlier. Would it be in order to move the postponement of further debate on this Resolution until the point in question has been cleared up? You stated, Mr. Speaker, that it was a manuscript Amendment, and you had not had time to consider it in all its aspects. It was not clear to some of us, when the reply was given on behalf of the Government, that the Financial Secretary was fully seized of the point at issue. If the point is going to make some difficulty in the drafting of the Finance Bill, and if it is going to mean that at a later stage we shall need a fresh Resolution in order to put the Finance Bill into proper form to deal with the point, would it not be better to postpone the further consideration of this Resolution and to take the other Resolutions, leaving this Resolution to be debated later, when the authorities have been consulted and we can be assured that this matter relates to the Finance Act of 1920?
Under the Interpretation Act, the reference to Section 32 of the Income Tax Act, 1918, means that Section as amended by any subsequent legislation. Consequently, although this may be an inconvenient way of doing it, is it not a fact that, technically, the reference to Section 32 of the Income Tax Act, 1918, means that Section as amended by the Act of 1920?
Since I was asked to deal with the point of Order earlier, I have had time to consider the matter, and I find that the Resolution as it stands is quite in order, and there is no need to change it. If the hon. and gallant Member wishes to amend it he had better wait until the Finance Bill is introduced, and then he can move an Amendment.
I beg to move, in line 6, at the end, to insert the words "and threepence."
My object in moving the Amendment is to find out from the Government precisely what is their intention in regard to this Resolution. Section 26 of the Finance Act of 1920 says:
Shall, subject as hereinafter provided, be entitled to have the amount of tax payable by him reduced by a sum representing tax at the appropriate rate on the amount of the premium paid by him for any such insurance or contract or on the amount of the sum paid by him or deducted from his salary or stipend.
It then proceeds to make provision for relief in respect of a certain proportion of the standard rate of Income Tax. As I read the Resolution, I think, possibly, the effect may be that no matter what the standard rate of Income Tax may be in any given year, no person will be entitled to have more than a proportion of 4s. in the pound deducted from his Income Tax in respect of premium paid on insurance policies. If I am right, it seems to me that the Chancellor of the Exchequer is undertaking a new line of policy. It has been the policy of several Chancellors of the Exchequer to encourage individuals to insure their lives and with that object in view they have been granted exemption from Income Tax on the premiums paid in respect of such insurance. That has not only encouraged saving, but it has encouraged men to make provision for their widows and children in the event of their death. There is very much to be said for encouraging that saving, and I cannot understand why the Chancellor of the Exchequer on this occasion is seeking to alter what has been the law of this country at any rate since 1920, and why he is saying that, whatever the Income Tax may be, he is laying down an arbitrary rate of 4s. which shall be regarded
as the standard rate. That is a bad proposal, if my interpretation is right, and I should like an explanation from the Chancellor of the Exchequer.
The hon. and gallant Member for Oxford (Captain Bourne) has raised a point in regard to the appropriate rate of rebate on life insurance policies, and he suggested that in a future year even if Income Tax were raised to 6s. in the pound, persons entitled to rebate on life insurance policies would only be able to get a proportionate reduction by reference to the rate of 4s. in the pound. If in the future there should be a change in the rate of Income Tax, it might be necessary to reconsider the position. The Financial Secretary dealt briefly with this point in connection with the previous Amendment, and he pointed out that, unless the law were amended, a person would be able to deduct on account of life insurance premium which did not exceed one-sixth of his total income, Income Tax at the rate of 2s. 3d. in the pound, that is, half the standard rate of Income Tax. What we are proposing is that the deduction should be at 2s. in the pound and not at 2s. 3d. in the pound. If he were permitted to deduct Income Tax at the rate of 2s. 3d. in the pound, the result would be that in nearly all cases the insured person would be getting a deduction on his insurance premiums of 3d. in the pound more than the Income Tax he had actually paid. He will pay 2s. in the pound in future, not on the first £225 of taxable income, but upon the first £250, instead of 2s. 3d. That is the reason why we are making the deduction for Income Tax purposes in respect of insurance premiums, 2s., because if we did not do that and we allowed a deduction of half the standard rate of Income Tax, the insured person would actually be getting a higher rate of deduction than the Income Tax he had actually paid.
I am sorry that I cannot give the exact figures, but I should think that it would not be material. I entirely agree with what the hon. and gallant Member for Oxford said in regard to the importance of encouraging saving to life insurance.
The Chancellor of the Exchequer has explained that this new principle is brought in for the purpose of preventing those who pay Income Tax at the lower rate receiving rebate in respect of insurance premiums at the higher rate, and that those who take up insurance shall not benefit by receiving in rebate on their premiums a larger sum than they have actually paid in Income Tax. If that is the only reason, it would be quite easy and proper to say that they should not be allowed to claim a rebate for more than they have paid in Income Tax. It would be literally simple. There must be many other cases besides the one case that the right hon. Gentleman has selected in which there is a variation. It is not all who would get back three-pence more. Some are being handicapped by paying one amount and receiving back a different one. It would be quite easy for the Exchequer to say: "We do not want to prejudice insurance and therefore we will allow a rebate up to the amount of Income Tax paid, and no more." No one could complain then.
The right hon. Gentleman ought to be very careful not to do anything to prejudice insurance. Insurance is a great advantage to the State. All these policies become part of the estate of the dead person when death occurs, and they pay Estate Duty on the amount insured. It would be penny wise and pound foolish in order to gain a few pounds per annum to lose hundreds of pounds of a capital sum in Death Duties. The Chancellor of the Exchequer has dealt with this matter as if it only applied to the people who are concerned with the 2s. 3d. rate. I may be wrong, because there have been so many alterations in the Finance Acts that it has been extraordinarily difficult to follow them, but surely in respect of some policies, in some ranges of income, much more than 2s. 3d. is allowed; the full tax is allowed. At any rate, it used to be so in the older policies. The right hon. Gentleman is dealing with the old policies as well as the others. The old policies, if I am right, are allowed, so long as the premiums do not exceed one-sixth of the total income, to deduct the full amount.
I know that. Take the case of a person who is, say, paying £500 a year in insurance premiums, is he not entitled to 4s. in the pound upon that £500? The Chancellor of the Exchequer is saying that in future they are not to be entitled to the 4s. 6d., but they are only to be entitled to 4s. He is trying to prejudice these insured people to the extent of 6d. in the pound. The explanation which has been given by the right hon. Gentleman is not satisfactory, because he spoke as if the matter affected only the 2s. 3d. people. It is unwise and unfair when you have made a bargain with a certain set of insured people that you should now increase the taxation and deprive them of the appropriate rebate. It has never been done before. When the Income Tax was 4s. 6d. in the pound they were allowed the rebate in respect of the 4s. 6d., and the same applied when the Income Tax was 5s. in the pound and 6s. in the pound, and this principle is being thrown over, for the first time, by a Socialist Government.
It is unfortunate that I was not in the House when the Chancellor of the Exchequer was making his statement on this matter. I should like to support the attitude which my right hon. Friend the Member for St. George's (Sir L. Worthington-Evans) has taken in regard to the retrospective character of this proposal. I think it is a thoroughly wrong principle and one which ought not to be brought about in the way the Chancellor of the Exchequer suggests. Whatever may have been done in the past, we must stand the racket of it. The proposals of the future must, of course, have the full fruition which can be accomplished through the machinery of the Government, but unless there has been some attempt at deliberate fraud in the past in regard to this matter, I think that the very sound precedent which has been followed ought not to be broken. With regard to the other point, where there is a really substantial element of life assurance, I think that the Chancellor of the Exchequer should be very careful not to take any action which would seriously affect that. But in the case of what are known as pure endowment policies over a term of five years, that undoubtedly is done with a view to the evasion of Surtax. I do not think there can be any doubt about that. On that question I think that the Chancellor of the Exchequer is taking a legitimate step in order to ensure that there is no evasion. In regard to policies of endowment for 20 years or 15 years, the position, of course, is different.
I should like to know whether the Chancellor of the Exchequer is fully conscious of the fact that this will apply to policies prior to 1916. I have two sets of policies, and many other people have, which were taken out prior to 1916 and, provided that the amount of the policies are within one-sixth of the total income, the total amount of the premium has received the benefit of the rebate. These policies were taken out on that express condition at the time, and it is definitely going back on the assurance that was then given to the people who insured their lives in order that they should be given these special privileges. It was intended as an inducement to them, and it would be almost a piece of sharp practice if, in the case of these old policies, the Government went back on what has been the practice for many years.
May I suggest that, in order to get over the difficulty from the point of view of the Exchequer and in order that a man may not get back anything more than he has to pay, let us put the matter as it was prior to the introduction of this Budget and compel the man to produce his receipt? If a man produces his receipt, I think that will meet the case from the point of view of the Chancellor of the Exchequer.
Surely we are going to have an answer from the Government on this matter, and on the very precise issue which has been raised by the discussion. The Chancellor of the Exchequer made a reasoned statement for having brought forward this Resolution. He gave a very clear reason, but it was not the reason, evidently, by which this matter is actually governed. That is not very pleasant. The reason which the Chancellor of the Exchequer gave us was that, owing to the further restrictions of the zone of Income Tax payers, a certain class of persons would, if the law had been allowed to remain unaltered, have actually been receiving more than they would be called upon to pay. But now it is shown that by far the greater part of this tax will not fall on such persons, but on other persons who will be paying back at least what they receive. The pre-1916 part of this proposal touches the principle of retrospective action in regard to evasion, upon which definite decisions have been taken and the business of the country has preceded. The right hon. Gentleman says that he expects to get £500,000 from this—half a million a year. Now, by whom is this £500,000 going to be paid and on what process of our national life is it going to impinge? It is going to impinge as a deterrent upon the whole process of insurance. That is the intention and the object. The object has nothing whatever to do with these people between £250 and £225—
But the Resolution is dealing with the whole subject. I think it will be inconvenient to discuss it in parts. I place myself entirely under the protection of the Chair, but very often it is customary to allow a more or less general discussion on the first Amendment which raises a point in connection with the Resolution, and, basing myself upon that custom, as the matter has been raised, I say: Who is he getting the £500,000 from and upon what process of our national and economic life is this new tax to impinge? It is no use for the right hon. Gentleman to try and pretend that he can get away in a manner of this kind by trying to make the discussion piecemeal, by trying to burke discussion, by having one fragment discussed on one Amendment and another fragment on another. Luckily, our procedure prevents that method from being entirely successful and I hope the House and the country will appreciate what is really intended. I ask the right hon. Gentleman whether he has imposed this duty with a view to obtaining £500,000 a year from the persons who have hitherto enjoyed the privileges granted to them in connection with insurance. If he is, surely, he is taking a very injurious course, and I do not wonder that my right hon. Friend the Member for Northern Cornwall (Sir D. Maclean) was moved to make a qualified protest upon this subject. As my right hon. Friend the Member for St. George's (Sir L. Worthington-Evans) pointed out, these very insurance policies all come into the purview of the death duties. They are an aggregative tax on the estate which falls in at death.
The process of insurance is surely one which from every point of view, except that of "the road to ruin," should be encouraged by the Government. People make sacrifices to insure their lives in case, owing to the chances, and ups and downs of their walk of life and their employment, they should be cut off at a moment when their families would be left in circumstances of great embarrassment, involving a complete alteration in their mode of life. They make great sacrifices year after year and thereby immense funds are steadily gathered, which funds constitute one of the few processes of collective saving now at work in this country. Hon. Gentlemen opposite may try to sweep away private savings. They may declare that wealth is not to be allowed above a certain scale or standard. But I imagine that they will allow the process of collective saving to proceed. Here is a process of securing vast sums which the State has thought it right and necessary to protect and now the right hon. Gentleman is coming to break in upon this process. Even on their awn dismal theories is that a proposal with which hon. Members opposite agree? It is, from his own point of view, the most short-sighted policy that he could adopt. I should have thought that the encouragement of insurance policies was one of the most necessary elements in a wise treatment of British finances at the present time. We see the enormous advantage of this method. We are a nation which has carried insurance in the industrial and social spheres to incomparably higher levels than any other country in the world. Then why should the right hon. Gentleman strike this blow? Is it really worth it?
Of course, the taxpayer is the victim. He is to be left on the rack. If the right hon. Gentleman is to be judged by the efficiency with which he can screw the last bit out of the taxpayer then, on that principle, he would, indeed, be blameworthy if he rejected such a very ingenious little extra turn of the screw as is here proposed. But, on another principle, to a Chancellor of the Exchequer who desires to see the whole forces of this country gaining in strength apart from the individual, such a proposal is most short-sighted and most ill-motived. I hope we are going to hear from the President of the Board of Trade who has, I see, been brought into this discussion, and who has considerable departmental responsibility in regard to the progress of insurance in this country, some statement to the effect that the Government will reconsider this matter. It really is not worth while. What you gain in the £500,000 a year will probably inflict discouragement upon the actual practice of insurance and will make a loss in the ultimate yield years hence which will far exceed the gain to the revenue. Why break in upon the principles which has been established in regard to these premiums? What is the point of breaking in upon that principle for such a paltry advantage as that which has been described?
I ask the President of the Board of Trade to say that the matter will be reviewed and reconsidered. We are quite aware of the fact that, ploughing with borrowed oxen, the Government have the power to carry it in any form they like. One of the oxen looks like giving at the moment, but, no doubt, the goad, accurately applied, will stir him into his wonted activity. We know all that, but the fact remains that the right hon. Gentleman is doing this quite needlessly. I admit that he has enormous difficulties to face and that in facing them he must necessarily run counter to a great many elements in the nation but in this case he is quite needlessly broadening the irritation and the burden which his Budget, inflicts, by casting into it—for what is an inconceivably small sum of money compared with the problem which he has to meet—the whole wide area of these policies of insurance.
I think it is quite unnecessary, if I may say so with respect, to follow the right hon. Gentleman the Member for Epping (Mr. Churchill) in the spectacular turn which he has given to this discussion because like all matters of taxation, and indeed everything else, it comes back quite simply to the plain facts and the facts in this case are overwhelmingly on the side of my right hon. Friend the Chancellor of the Exchequer. Perhaps the House will bear with me if in order to try to clarify the issue I summarise what I understand to have been the position under the Finance Act, 1916. As hon. Members have already pointed out in the case of policies existing at the passing of the Act of 1916, an allowance is made in respect of insurance premiums on incomes of £1,000 per annum equal to one-half of the standard rate; on incomes between £1,000 and £2,000 equal to three-quarters of the standard rate, and on incomes above £2,000 equal to the full standard rate of tax.
Under that Act changes were introduced and as regards insurance premiums on policies after 22nd June, 1916, the allowance now given is not more than one-half of the standard rate of tax subject always to the condition that the premiums paid would never exceed for this purpose one-sixth of the income of the individual. As I understand it, there is no difference of opinon between us as regards the lower ranges of income. My right hon. Friend the Chancellor of the Exchequer and my hon. Friend the Financial Secretary to the Treasury have, I understand, explained to the House that in view of the change and the policy of maintaining the rate at 2s. in the pound on the first £250 of taxable income it would be utterly wrong to give relief at a greater rate in respect of insurance premiums, because then an allowance would be given in respect of those premiums at a rate higher than that which was actually being charged, and, accordingly, as regards the majority of people who are entitled to that concession there is not any dispute before the House.
But, the right hon. Gentleman, and, apparently, other speakers as well, have suggested that there is some disadvantage to other classes of incomes in that we do not maintain as regards pre-22nd June, 1916, policies, concessions either at one-half or three-quarters or the full standard rate. In taking a line like that they have omitted to observe that all incomes will enjoy the concession which is given in regard to the first £250 which is taxable. The allowance in that case is at the old rate. That is without alteration, and the position is exactly maintained for those people as it is for the smaller ranges of income. If allowance is made under that head in respect of people enjoying higher incomes, it is, of course, a substantial consideration, and up to approximately £2,000 per annum I do not think that by and large there is any appreciable alteration. Some may pay a little less, others just a fraction more, but no one can contend that he is prejudiced in any way.
The right hon. Gentleman now argues almost with ferocity that there is some injury to the people above that level, and he thinks that this proposal is breaking a bargain entered into between the State as the taxing authority and the people who are getting these Income Tax concessions in relation to insurance premiums. It is true that to some extent they are at a small disadvantage, but it is only a small disadvantage, and, in any case, any Chancellor of the Exchequer is always within his rights in altering the law for reasons of finance, more particularly if he is satisfied that
over the whole range of the subjects justice and even generosity have been extended. The law as I have said was changed in 1916. The allowances at the full standard rate at three-quarters and at half of the standard rate apply only to then existing policies, and the maximum allowance in regard to any class of policy after June, 1916, became one-half of the standard rate, with that qualifying conditions to which I have referred regarding the aggregate amount of premiums as applied to Income Tax. I see not the slightest ground for the charge of going back upon a bargain, and, for those reasons, I am satisfied that no injustice has been done, and that the Amendment must be resisted.
One thing the right hon. Gentleman has made perfectly clear, and that is that what purported to be the explanation of the Chancellor of the Exchequer on this proposal was no explanation at all. What the right hon. Gentleman the Chancellor of the Exchequer dealt with was the smallest part of the change which he is making, while the larger part, has been, per incuriam, if not intentionally, concealed from the House. When the Chancellor of the Exchequer was questioned about the pre-1916 policies, he said that matter was not dealt with in the Amendment, and he refrained from any explanation. I propose to accept the challenge which the right hon. Gentleman tacitly threw out, and as soon as this Amendment has been disposed of I will move an Amendment to deal with the pre-1916 policies.
|Division No. 272.]||AYES.||[4.58 p.m.|
|Acland-Troyte, Lieut.-Colonel||Bowater, Col. Sir T. Vansittart||Churchill, Rt. Hon. Winston Spencer|
|Albery, Irving James||Bowyer, Captain Sir George E. W.||Cockerill, Brig.-General Sir George|
|Allen, Sir J. Sandeman (Liverp'l., W.)||Bracken, B.||Cohen, Major J. Brunel|
|Ashley, Lt.-Col. Rt. Hon. Wilfrid W.||Briscoe, Richard George||Colfox, Major William Philip|
|Astor, Viscountess||Brown, Brig.-Gen. H. C. (Berks, Newb'y)||Colville, Major D. J.|
|Atholl, Duchess of||Buchan, John||Courthope, Colonel Sir G. L.|
|Atkinson, C.||Buckingham, Sir H.||Crichton-Stuart, Lord C.|
|Baldwin, Rt. Hon. Stanley (Bewdley)||Bullock, Captain Malcolm||Cranborne, Viscount|
|Balniel, Lord||Castle Stewart, Earl of||Crookshank, Capt. H. C.|
|Beamish, Rear-Admiral T. P. H.||Cautley, Sir Henry S.||Culverwell, C. T. (Bristol, West)|
|Beaumont, M. W.||Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)||Cunliffe-Lister, Rt. Hon. Sir Philip|
|Betterton, Sir Henry B.||Chadwick, Sir Robert Burton||Dalrymple-White, Lt.-Col. Sir Godfrey|
|Bevan, S. J. (Holborn)||Chamberlain, Rt. Hn. Sir J. A. (Blrm., W.)||Davies, Dr. Vernon|
|Birchall, Major Sir John Dearman||Chamberlain, Rt. Hon. N. (Edgbaston)||Davies, Maj. Geo. F. (Somerset, Yeovil)|
|Bird, Ernest Roy||Chapman, Sir S.||Davison, Sir W. H. (Kensington, S.)|
|Bourne, Captain Robert Croft.||Christie, J. A.||Duckworth, G. A. V.|
|Dugdale, Capt. T. L.||James, Lieut.-Colonel Hon. Cuthbert||Ross, Major Ronald D.|
|Eden, Captain Anthony||Jones, Henry Haydn (Merioneth)||Ruggles-Brise, Lieut.-Colonel E. A.|
|Edmondson, Major A. J.||King, Commodore Rt. Hon. Henry D.||Salmon, Major I.|
|Elliot, Major Walter E.||Knox, Sir Alfred||Samuel, A. M. (Surrey, Farnham)|
|England, Colonel A.||Lamb, Sir J. O.||Samuel, Samuel (W'dsworth, Putney)|
|Erskine, Lord (Somerset, Weston-s-M.)||Law, Sir Alfred (Derby, High Peak)||Sandeman, Sir N. Stewart|
|Everard, W. Lindsay||Leighten, Major B. E. P.||Savery, S. S.|
|Falle, Sir Bertram G.||Lewis, Oswald (Colchester)||Skelton, A. N.|
|Ferguson, Sir John||Llewellin, Major J. J.||Smith, Louis W. (Sheffield, Hallam)|
|Fermoy, Lord||Locker-Lampson, Rt. Hon. Godfrey||Smith-Carington, Neville W.|
|Fison, F. G. Clavering||McConnell, Sir Joseph||Smithers, Waldron|
|Ford, Sir P. J.||Macquisten, F. A.||Spender-Clay, Colonel H.|
|Galbraith, J. F. W.||MacRobert, Rt. Hon. Alexander M.||Stanley, Lord (Fylde)|
|Ganzoni, Sir John||Makins, Brigadler-General E.||Stanley, Maj. Hon. O. (W'morland)|
|Gault, Lieut.-Col. Andrew Hamilton||Margesson, Captain H. D.||Steel-Maitland, Rt. Hon. Sir Arthur|
|Gilmour, Lt.-Col. Rt. Hon. Sir John||Marjoribanks, E. C.||Stuart, Hon. J. (Moray and Nairn)|
|Glyn, Major R. G. C.||Meller, R. J.||Sueter, Rear-Admiral M. F.|
|Grace, John||Mitchell, Sir W. Lane (Streatham)||Tinne, J. A.|
|Graham, Fergus (Cumberland, N.)||Monsell, Eyres, Com. Rt. Hon. Sir B.||Todd, Capt. A. J.|
|Grattan-Doyle, Sir N.||Morrison, W. S. (Glos., Cirencestar)||Train, J.|
|Gunston, Captain D. W.||Muirhead, A. J.||Vaughan-Morgan, Sir Kenyon|
|Hall, Lieut.-Col. Sir F. (Dulwich)||Newton, Sir D. G. C. (Cambridge)||Wallace, Capt. D. E. (Hornsey)|
|Hammersley, S. S.||Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)||Wardlaw-Milne, J. S.|
|Hanbury, C.||O'Neill, Sir H.||Warrender, Sir Victor|
|Hannon, Patrick Joseph Henry||Ormsby-Gore, Rt. Hon. William||Waterhouse, Captain Charles|
|Haslam, Henry C.||Peake, Captain Osbert||Wayland, Sir William A.|
|Henderson, Capt. R. R. (Oxf'd, Henley)||Peto, Sir Basil E. (Devon, Barastaple)||Wells, Sydney R.|
|Hennessy, Major Sir G. R. J.||Pilditch, Sir Philip||Wilson, G. H. A. (Cambridge U.)|
|Hills, Major Rt. Hon. John Waller||Pownall, Sit Assheton||Windsor-Clive, Lieut.-Colonel George|
|Hope, Sit Harry (Forfar)||Preston, Sir Walter Rueben||Wolmer, Rt. Hon. Viscount|
|Horne, Rt. Hon. Sir Robert S.||Purbrick, R.||Wood, Rt. Hon. Sir Kingsley|
|Howard-Bury, Colonel C. K.||Ramsbotham, H.||Worthington-Evans, Rt. Hon. Sir L.|
|Hudson, Capt. A. U. M. (Hackney, N.)||Rawson, Sir Cooper|
|Hunter-Weston, Lt.-Gen. Sir Aylmer||Remer, John R.||TELLERS FOR THE AYES.—|
|Hurd, Percy A.||Rentoul, Sir Gervals S.||Sir George Penny and Marquess|
|Hurst, Sir Gerald B.||Roberts, Sir Samuel (Ecclesall)||of Titchfield.|
|Iveagh, Countess of||Rodd, Rt. Hon. Sir James Rennell|
|Adamson, Rt. Hon. W. (Fife, West)||Daggar, George||Hastings, Dr. Somerville|
|Adamson, W. M. (Staff., Cannock)||Dallas, George||Haycock, A. W.|
|Addison, Rt. Hon. Dr. Christopher||Davies, E. C. (Montgomery)||Hayday, Arthur|
|Aitchison, Rt. Hon. Craigle M.||Davies, Rhys John (Westhoughton)||Hayes, John Henry|
|Alexander, Rt. Hon. A. V. (Hillsbro')||Day, Harry||Henderson, Thomas (Glasgow)|
|Alpass, J. H.||Denman, Hon. R. D.||Henderson, W. W. (Middx., Enfield)|
|Ammon, Charles George||Dickson, T.||Herriotts, J.|
|Arnott, John||Dudgeon, Major C. R.||Hirst, G. H. (York W. R. Wentworth)|
|Aske, Sir Robert||Dukes, C.||Hirst, W. (Bradford, South)|
|Ayles, Walter||Ede, James Chuter||Hoffman, P. C.|
|Baker, John (Wolverhampton, Bilston)||Edmunds, J. E.||Hollins, A.|
|Baldwin, Oliver (Dudley)||Edwards, E. (Morpeth)||Hopkin, Daniel|
|Barnes, Alfred John||Egan, W. H.||Horrabin, J. F.|
|Barr, James||Elmley, Viscount||Hudson, James H. (Huddersfield)|
|Batey, Joseph||Foot, Isaac||Hunter, Dr. Joseph|
|Beckett, John (Camberwell, Peckham)||Freeman, Peter||Hutchison, Maj.-Gen. Sir R.|
|Bellamy, Albert||Gardner, B. W. (West Ham, Upton)||Isaacs, George|
|Bennett, Captain E. N. (Cardiff, Central)||Gardner, J. P. (Hammersmith, N.)||Jenkins, W. (Glamorgan, Neath)|
|Benson, G.||George, Major G. Lloyd (Pembroke)||John, William (Rhondda, West)|
|Bevan, Aneurin (Ebbw Vale)||George, Megan Lloyd (Anglesea)||Johnston, Thomas|
|Birkett, W. Norman||Gibbins, Joseph||Jones, F. Llewellyn- (Flint)|
|Blindell, James||Gibson, H. M. (Lancs, Mossley)||Jones, J. J. (West Ham, Silvertown)|
|Bondfield, Rt. Hon. Margaret||Gill, T. H.||Jones, Morgan (Caerphilly)|
|Bowerman, Rt. Hon. Charles W.||Gillett, George M.||Jones, T. I. Mardy (Pontypridd)|
|Broad, Francis Alfred||Glassey, A. E.||Jowett, Rt. Hon. F. W.|
|Brockway, A. Fenner||Gossling, A. G.||Jowitt, Rt. Hon. Sir W. A.|
|Bromfield, William||Gould, F.||Kennedy, Thomas|
|Bromley, J.||Graham, D. M. (Lanark, Hamilton)||Kinley, J.|
|Brooke, W.||Graham, Rt. Hon. Wm. (Edin., Cent.)||Knight, Holford|
|Brown, Rt. Hon. J. (South Ayrshire)||Granville, E.||Lambert, Rt. Hon. George (S. Molton)|
|Burgess, F. G.||Gray, Milner||Lang, Gordon|
|Buxton, C. R. (Yorks, W. R. Elland)||Greenwood, Rt Hon. A. (Colne).||Lansbury, Rt. Hon. George|
|Buxton, Rt. Hon. Noel (Norfolk, N.)||Grenfell, D. R. (Glamorgan)||Lathan, G.|
|Caine, Derwent Hall-||Griffith, F. Kingsley (Middlesbro' W.)||Law, A. (Rosendale)|
|Cameron, A. G.||Griffiths, T. (Monmouth, Pontypool)||Lawrence, Susan|
|Cape, Thomas||Groves, Thomas E.||Lawson, John James|
|Carter, W. (St. Pancras, S. W.)||Grundy, Thomas W.||Lawther, W. (Barnard Castle)|
|Chater, Daniel||Hall, F. (York, W. R., Normanton)||Leach, W.|
|Church, Major A. G.||Hall, G. H. (Merthyr Tydvil)||Lee, Frank (Derby, N. E.)|
|Cluse, W. S.||Hall, Capt. W. P. (Portsmouth, C.)||Lee, Jennie (Lanark, Northern)|
|Cocks, Frederick Seymour||Hamilton, Mary Agnes (Blackburn)||Lees, J.|
|Collins, Sir Godfrey (Greenock)||Hamilton, Sir R. (Orkney & Zetland)||Lindley, Fred W.|
|Compton, Joseph||Hardle, George D.||Lloyd, C. Ellis|
|Cowan, D. M.||Harris, Percy A.||Logan, David Gilbert|
|Longbottom, A. W.||Phillips, Dr. Marion||Snowden, Rt. Hon. Philip|
|Longden, F.||Picton-Turbervill, Edith||Snowden, Thomas (Accrington)|
|Lunn, William||Pole, Major D. G.||Sorensen, R.|
|McEntee, V. L.||Potts, John S.||Stamford, Thomas W.|
|Mackinder, W.||Price, M. P.||Stewart, J. (St. Rollox)|
|McKinlay, A.||Pybus, Percy John||Strachey, E. J. St. Loe|
|MacLaren, Andrew||Ramsay, T. B. Wilson||Strauss, G. R.|
|Maclean, Sir Donald (Cornwall, N.)||Raynes, W. R.||Sullivan, J.|
|Maclean, Nell (Glasgow, Govan)||Richardson, R. (Houghton-le-Spring)||Taylor, W. B. (Norfolk, S. W.)|
|MacNeill-Weir, L.||Riley, Ben (Dewsbury)||Thomas, Rt. Hon. J. H. (Derby)|
|Macpherson, Rt. Hon. James I.||Riley, F. F. (Stockton on-Tees)||Thorne, W. (West Ham, Plaistow)|
|McShane, John James||Ritson, J.||Thurtle, Ernest|
|Malone, C. L'Estrange (N'thampton)||Roberts, Rt. Hon. F. O. (W. Bromwich)||Tillett, Ben|
|Mander, Geoffrey le M.||Romeril, H. G.||Tinker, John Joseph|
|Mansfield, W.||Rosbotham, D. S. T.||Trevelyan, Rt. Hon. Sir Charles|
|March, S.||Rothschild, J. de||Turner, B.|
|Markham, S. F.||Rowson, Guy||Vaughan, D. J.|
|Marley, J.||Russell, Richard John (Eddisbury)||Viant, S. P.|
|Marshall, Fred||Salter, Dr. Alfred||Walkden, A. G.|
|Mathers, George||Samuel, Rt. Hon. Sir H. (Darwen)||Walker, J.|
|Matters, L. W.||Samuel, H. W. (Swansea, West)||Watkins, F. C.|
|Melville, Sir James||Sanders, W. S.||Watson, W. M. (Dunfermline)|
|Millar, J. D.||Sandham, E.||Wellock, Wilfred|
|Milner, Major J.||Sawyer, G. F.||Welsh, James (Paisley)|
|Montague, Frederick||Scrymgeour, E.||Welsh, James C. (Coatbridge)|
|Morley, Ralph||Scurr, John||West, F. R.|
|Morris, Rhys Hopkins||Shaw, Rt. Hon. Thomas (Preston)||Westwood, Joseph|
|Morris-Jones, Dr. J. H. (Denbigh)||Shepherd, Arthur Lewis||Wheatley, Rt. Hon. J.|
|Morrison, Herbert (Hackney, South)||Sherwood, G. H.||Whiteley, Wilfrid (Birm., Ladywood)|
|Morrison, Robert C. (Tottenham, N.)||Shield, George William||Whiteley, William (Blaydon)|
|Mort, D. L.||Shillaker, J. F.||Wilkinson, Ellen C.|
|Moses, J. J. H.||Shinwell, E.||Williams, David (Swansea, East)|
|Mosley, Lady C. (Stoke-on-Trent)||Short, Alfred (Wednesbury)||Wilson, C. H. (Sheffield, Attercliffe)|
|Muff, G.||Simmons, C. J.||Wilson, J. (Oldham)|
|Murnin, Hugh||Simon, E. D. (Manch'ter, Withington)||Wilson, R. J. (Jarrow)|
|Nathan, Major H. L.||Sinclair, Sir A. (Caithness)||Winterton, G. E. (Leicester, Loughb'gh)|
|Newman, Sir R. H. S. D. L. (Exeter)||Sinkinsen, George||Wise, E. F.|
|Oldfield, J. R.||Smith, Alfred (Sunderland)||Wood, Major McKenzie (Banff)|
|Oliver, George Harold (Ilkeston)||Smith, Ben (Bermondsey, Rotherhithe)||Young, R. S. (Islington, North)|
|Owen, Major G. (Carnarvon)||Smith, Frank (Nuneaton)|
|Palin, John Henry||Smith, H. B. Lees- (Keighley)||TELLERS FOR THE NOES.—|
|Parkinson, John Allen (Wigan)||Smith, Rennie (Penistone)||Mr. Charles Edwards and Mr.|
|Perry, S. F.||Smith, Tom (Pontefract)||Paling.|
|Pethick-Lawrence, F. W.||Snell, Harry|
I beg to move, in line 6, at the end, to insert the words:
Provided that this amendment shall not apply to policies taken out before the twenty-second day of June, nineteen hundred and sixteen.
As I understand the explanation offered by the Government, and in particular by the President of the Board of Trade, the Resolution will not adversely affect other policies than those. By the accident of Debate we elicited the fact that it would adversely affect policies taken out before 1916, which had been specifically safeguarded by previous Acts. The Chancellor of the Exchequer said that the sum of money at stake was negligible as far as the revenue is concerned, amounting to about half a million, but obviously that half a million, or the major part of it, is coming, not in refraining from overpaying on the insurance policies of small incomes. The opportunity is being taken to re-open a bargain made with policy owners before 1916.
I move this Amendment for the purpose of offering the Chancellor of the Exchequer an opportunity of making an explanation to the House. It is a remarkable thing that he should have made an explanation of his Resolution and that from first to last not one single word was said on the major proposition contained in it. He took cover in an explanation that it was only to protect the revenue against paying out sums at large. The House is entitled to a further explanation, and I think the Chancellor of the Exchequer himself would wish to give it, of the part of the proposal concerned. I submit that it is doubly inexpedient and impolitic to go back on the arrangement made in respect of policies taken out before 1916.
I am not sure that if we were reviewing the whole subject impartially and coolly we should not find that it was in the public interest to revert to the pre-1916 policy in respect of any new insurance to be taken out hereafter, rather than to restrict the rights which were accorded to the pre-1916 policy holder. What has happened to him in the interval? The expenditure of the State has gone up enormously, the burden of our debt has risen, the demands upon his current income have risen proportionately, his power of spending money has diminished, and the inducements to save have been diminished by the sums you take out of his revenue and by the increased sums you take out of his estate when he dies; and that increased sum taken out of his estate is calculated on the estate, plus the capital amount for which he had insured. Therefore, the more he insured his life, the heavier is the debt his estate has to pay.
Death Duties have become a very important part of our financial system. Hitherto, whatever has happened, they have risen steadily. When other revenues have been disappointing they have exceeded the expectations of the Chancellor of the Exchequer. They are, therefore, a most valuable source of revenue to the State. They should be carefully guarded. Are you guarding them? Are you continuing the restrictions which were imposed when these duties were introduced and when the burdens imposed on those who took out policies of insurance were less heavy? Would you not be wise, as you increase the burden of the Death Duties, to encourage the life insurers who preserve or create the capital which is required to feed your revenue? On grounds of high policy I submit that the step you are taking is not only one which ought not to be taken, but is clearly a step in the wrong direction.
The second point I would suggest to the House is no less worthy of consideration. In matters of this kind we surely ought to be careful to keep faith with the taxpayer. We revise our rates for the future. We alter Income Tax from year to year and we may alter Death Duties from year to year, but we levy them from that day forward at the new rate. We do not go back. Here are insurance policies which people were encouraged to make because it was in the interests of the State that they should make them. When for reasons which seemed good to the Chancellor of the Exchequer of the day, those terms were withdrawn from future insurance, he felt it improper to break the terms of a bargain which the other party had already made, from which he could not extricate himself, by which he continued bound, and he therefore excluded the pre-1916 policies.
The Chancellor of the Exchequer has taken steps to prevent the revenue being defrauded. He has taken steps which will secure that he never repays more than has been paid by the recipient; it is to be a repayment and nothing more. Cannot he be content with that, in view of the new importance of the Death Duties, and the immense interest of the State in getting people to conserve capital, so that it may not only feed industry at the present time, but may feed the revenue in the future, and so that his successors may draw the same revenue, or a greater amount, from Death Duties than he or his predecessors? If he is not prepared to give further encouragement in that direction, at least I ask him to keep faith with those who have made a bargain, being encouraged thereto by the State, and being offered certain terms by the State in order to make it, now that they are bound by their bargain and cannot be relieved from it.
My explanation has already been given. I pointed out that I was dealing with the Amendment of the hon. and gallant Member for Oxford (Captain Bourne). The right hon. Gentleman has had a long Parliamentary experience, and he knows that, when a specific question is before the House, it is the duty of the Government to deal with that specific question and with no other question. There was no Amendment on the Paper dealing with the matter which has been raised on the Amendment which the right hon. Gentleman has now moved. It is nearly a month since the introduction of the Budget. The Opposition have had weeks in which to consider these Resolutions. No Amendment has been put down, and, therefore, if I had been in order in dealing with the whole Resolution on the Amendment of the hon. and gallant Member for Oxford, I might safely have assumed that the Opposition were aware of the effect that the Resolution would have upon the pre-1916 policies, and that they raised no objection to it.
That is the explanation. I do not expect that it will be satisfactory. The right hon. Gentleman said that his Amendment raises the most important part of the whole Resolution. In that he is wholly mistaken. The amount involved by the suggested alteration in the rates of allowance on the pre-1916 policies affects but a relatively small number of the total policies in existence, and the rates which it is proposed to substitute for those in the Act of 1916 will not affect any person with an income below £2,000 a year and an insurance premium of, I think—I forget the exact figure—about £237 a year.
Between one-quarter and one-third of the £500,000. The right hon. Gentleman devoted another part of his speech to preaching the virtue of the encouragement of thrift, but what relation has that to this proposal? All of these pre-1916 policies have already been taken out. [Interruption.] Any policies which were taken out after 1916, or which will be taken out in the future, are affected by the other part of the allowance, and that is an allowance which, as my right hon. Friend the President of the Board of Trade pointed out, does not seem to be opposed by the party opposite. Therefore, there can be no discouragement of thrift in that respect. The point has been made by the right hon. Gentleman that we have broken some contractual undertaking, but that is not the case. The changes were made by the Act of 1916 in the rates of allowance for Income Tax purposes. [HON. MEMBERS: "Pre-1916!"] An alteration was made in the rates of allowances for insurance, but, surely, the party opposite is not going to maintain that, in matters affecting taxation and revenue, future Governments are going to be bound by any particular conditions that may have been incorporated in a Finance Bill previously—
The position is precisely as affected by a change of Income Tax, and that is the point that I was leading up to. The rates of deduction that will now be given on the pre-1916 policies are based upon an Income Tax of 4s. in the £; that is to say, under this Resolution, the relief in respect of these policies will not be granted at the rates of 2s. 3d., 3s. 4½d. and 4s. 6d., but will be based upon an Income Tax of 4s. in the £, and that is precisely what we are doing in the case of the post-1916 policies. Therefore, there is a relation between them; we are doing the same thing in regard to both classes of policy; and I think we are perfectly justified in doing that, because it must be remembered also that all people who are going to be affected by this suggested change in the rate of deduction upon pre-1916 policies get the full allowance upon the £250, that is to say, the 2s. rate of allowance, paying only 2s. in the £ on £250 of their income, and that, in the great majority of cases, is more than compensation for anything extra that they would be called upon to pay or that they would lose by the slightly reduced allowance for life insurance policies. The imputation that the right hon. Gentleman made was quite unjustified. I had not the slightest intention at all of withholding anything from the House. I confined myself simply to the matter before the House, and I regret that the right hon. Gentleman should have made such an imputation on my good faith.
I am quite sure that no one thought for a moment that the Chancellor of the Exchequer was trying to mislead the House. He was addressing himself quite definitely to the particular point with which he had to deal. With regard to this Amendment, I hope that he will see that there is something more in it than he has put before the House. I would like to suggest one or two things to him. In the first place, it is very small in amount. As I understand it, the revenue will not be damnified to a greater extent than something like £150,000. In the second place—and this is much more important than the amount—you are dealing with a class of insurance policy holders who in the past have been accorded specific protection, and it is now proposed to take that protection from them. I suggest very respectfully to the Chancellor of the Exchequer that it is a bad thing to create the impression in the minds, not only of these special taxpayers, but of the public at large, that it is intended to sweep away these, I will not say privileges, but acts of justice, which the House has decided upon from time to time.
I would make an appeal to the Chancellor of the Exchequer. I may say that I voted for him in the last Division, and, therefore, I am in a position of detachment, if I may say so, from the interchange of, I will not say expletives, but vigorous references between the two Front Benches. This is a matter of considerable importance, and I would urge upon the Chancellor of the Exchequer that it is one in which he could quite well give way. His doing so will not affect his revenue, but it will give a sense of security and of continuity which I think is very important, especially in this matter of taxation. Further, I feel very strongly indeed upon this question of life insurance. It is of real and vital importance that this House should do nothing to discourage those who are insuring their lives against the very heavy imposts which fall upon their estates when they die. It is an enormous advantage to the revenue and to the Government of the day to have the cash ready, practically speaking, when the debt accrues. Small as this matter is, it may carry with it a very large amount of discouragement and distrust, and, from the point of view, not of the £150,000 which may be lost here or there, but of the much larger question of policy, I venture to appeal to the Chancellor of the Exchequer to put on one side all the decisions that have been made, and to meet a really substantial point by giving way in regard to this Amendment.
The Chancellor's speech has only made the matter worse. His defence is that this concerns only a small proportion of those who have taken out pre-1916 policies. He, therefore, laid down the axiom that, in the opinion of the Socialist Government, there is a different code of honour as regards majorities from what there is when you are dealing with minorities. It has been emphasised in several speeches that the matter of life insurance is a thing that was almost pressed upon people before the War, and in the early part of the War. It was done not only from the point of view of encouraging saving, but to assist the Government so that, when the Death Duties had to be collected, there would be the money ready to their hand. Many people insured their lives on that condition only, laying up for Death Duties. Many times afterwards, during the heavy taxation period of the last part of the War and afterwards, I have had to sell out capital to pay insurance premiums, and I think it is nothing more than a gross breach of faith to make an agreement with people to do this and to withdraw it 15 years afterwards. I think, if the Chancellor or I did that sort of thing in civil life, we should find ourselves in the law courts.
In the 12 years that I have been a Member of the House I have never yet heard a statement by a person in the position of the Chancellor of the Exchequer such as that which the right hon. Gentleman has addressed to the House. He said that this will not affect future thrift, as all these policies have been taken out and we cannot expect to get any more out of these people. The statement is monstrous. I interjected that it was equivalent to the right hon. Gentleman saying he is by no means bound to keep the same rate of interest at which people were asked to subscribe to War Loan. If you break faith with people who took out policies for insurance prior to 1916, the same argument applies to people who subscribed to War Loan at a certain rate of interest, and you may say it is not convenient, in the present state of the national finances, to pay so much. If you are entitled to break one, you are entitled to break the other.
The argument of members of the Liberal party is very much on a par. They say that this is only a little matter. What difference does it make if it is a breach of faith? It does not matter whether it is big or little. If you have made an agreement with the taxpayer, that if he takes out an insurance he will get certain allowances, you have no right to go behind that. I cannot believe that the right hon. Gentleman really meant what he said, but was inspired on the spur of the moment into somewhat hasty words. I hope, in the interests of the government of this country, and especially in the interest of the national finances, the Chancellor will stick to what has been understood to be a national obligation and will not go back on assurances that were given to people who took out life insurance prior to 1916.
I feel that there is something wrong about the assertions of hon. Members opposite. They have stated that policies taken out pre-1916 were entitled to certain privileges, and that policies taken out at a later date come under a different set of privileges. We are told this House has made a contract with insured persons. Those statements are not accurate. I do not want to say that they are not true, because the whole matter is so technical and so detailed that it is only those who are administering who have a million to one chance of understanding the matter clearly. I have had half a dozen insurance policies. They were all taken out prior to 1916. My income has never been, and is not now, £2,000 a year. The amount of insurance was not one-sixth of my annual income. I ought to have had relief at the full rate of tax. I have never had it. [Interruption.] Then you are wrong if I am right.
If my memory serves me rightly, when you get your Income Tax form, you are warned that you are entitled to receive an allowance, but the deduction will not exceed 2s. 3d. in the £ on policies taken out by a person with less than £2,000 a year prior to 1916, and, according to hon. Members opposite, they ought to be entitled to the full rate. Up to 1923 I thought I knew a good deal about this business, but I changed my occupation in that year and have lost touch. To-day, when we are dealing with two codes of honour, the assertion is made by hon. Members opposite that this matter was altered in 1918. Some of them were in this House and they gave a privilege to people with £2,000 that they would not give to people with less than £2,000. They say we want to break faith with the taxpayer. The taxpayer is reminded by at least the decent insurance officers, if not by all, that there can be relief on premiums paid. It is in some relation to the current rate of Income Tax under certain conditions, but, in the calculations one sees of what is likely to be the value of an endowment policy at the end of a given number of years, the decent offices at least draw attention to the fact that this is provided the Income Tax remains at 4s. in the £. There is no illusion, in the opinion of the managers of decent insurance offices, that this House has the right to regulate this matter in any succeeding Budget. The party opposite claimed the right in 1918 to do the same thing. If my memory serves me rightly, there were further differences made in 1921 and 1923. I wish hon. Members opposite would look up their facts before they talk about our being wrong. They have been barking up the wrong tree all the afternoon. It was they who swindled people with low incomes and gave privileges to those with big incomes.
I want to put this from the point of view of the Treasury. I do not believe that, in order to get £100,000 or £150,000, it is worth while for the Treasury to re-open the question of the pre-1916 policies. Death Duties were appreciably increased in 1919 and in 1925, and they are now being materially increased again in 1930. It is the only form of taxation that has been increased three times since the War. They have been paid loyally by these wealthy people who have these large sums behind them, but there comes a limit to human endurance. The remedy is perfectly simple and perfectly legal. All the wealthy man has to do when he is getting on in life is to hand over an appreciable proportion of his property to his heirs and successors. It is done by members of all parties, and the stiffer you make your Death Duties, the greater is the encouragement to do it. When you give a legitimate grievance to those who have taken out policies prior to 1916 you unsettle to some extent the minds of these wealthy individuals, who are worth something like £60,000 a year to the State. That is about the amount we get in Death Duties. Is it worth while, for the sake of £150,000 a year, to unsettle not only the pre-1916 policy people, but also those who may be taking out policies in the future? From the Treasury point of view, I do not think the right hon. Gentleman will be well advised in pressing the matter any further.
Not being an expert in insurance, I can only speak from the standpoint of those who are not insured. My only insurance depends on the fact that I am a member of the superannuation fund of my own union. That is enough to provide me with all I want, because I am afraid that when I go to the next world my money will all melt. But I am going to leave behind me all my responsibilities—grown up. I cannot for the life of me understand the trepidation of hon. Members opposite regarding the taxes they have to pay. Give me your income and I will rush and pay more. We are asking you to realise that, in order to get a paltry sum of money, we are going to tax the people who have got it. The proper policy, according to the philosophy expressed opposite, is, "Take it from the people who have not got it and leave us alone. Tax everyone who has not got much, but leave alone those who have got everything, particularly if they have done less for it." Why should they worry about the Death Duties? When I am dead—
Other Members have referred to the Death Duties, and I thought they were going to die whilst they were referring to them. They had tears in their voices. What is going to happen to them if they are not allowed to leave their money behind them before they go? Surely if they are allowed this latitude to talk all round the subject—
I do not wish to dispute your Ruling, but I want to say respectfully that two Members on the Opposition benches have already spoken about Death Duties, and almost brought tears to the eyes of the sceptre. [Interruption.] You may call it what you like—the Mace. It is the same thing. My knowledge of English history is as good as yours, although I do not come from West Kensington. I suggest that, as far as we are concerned, this Amendment is an attempt to save the rich at the expense of the poor. The Resolutions contained in the Budget are all part and parcel of a general policy. The money has to be found, and it has to be found from where it is. The people who have it are squealing, and the people who have not got it are not squealing. I am one of those who has not got it, but I shall probably have to pay more because the people who have the economic power will take care that everything which they pay shall come back again from us.
I want to speak for a few moments on the Amendment, which is merely to omit the pre-1916 policies, as my right hon. Friend said, on the ground that, for a very long time, at any rate, it has been understood that the premiums paid in respect of those policies should be deducted from the amount upon which Income Tax would otherwise be payable, and, consequently, that they should have a rebate for Income Tax. Whether that is a bargain or is not a bargain, it has been a recognised fact for a good long time—for 30 years to my knowledge, and probably more. So well was it recognised that in 1918 there was no attempt to deal with the pre-1916 policies. It was admitted at once, and no one disputed it, that those policies were subject to a special arrangement or bargain. The alteration reducing the allowances was specifically limited to the policies taken out after the 22nd June, 1916. The right hon. Gentleman defended his action—I am not sure whether it is a defence—or explained his action by saying that this was not a large amount—it was £150,000 a year—and that it was to come only from those with an income of over £2,000 a year, and that it could not affect thrift because, as far as he was concerned, he had "got" these people. They had already taken out their policies, and it was not a question of encouraging thrift in their case because there was nothing more to hope from them, and he could do what he liked with them. Is that really a sound argument?
The Chancellor of the Exchequer is on this occasion breaking this bargain to the extent of 6d. only. Instead of allowing 4s. 6d. rebate he is allowing 4s. re- bate. If that is open to him, why is it not open to him to abolish the rebate altogether? Why cannot he say we will take off not 6d. but 4s. 6d.? If that is done, or even if it is contemplated that this advantage hitherto given in order to encourage thrift and insurance should be taken away, what about the future? Those people who are now taking out policies are, within certain limits, entitled to claim half their premiums as a rebate from Income Tax. If he takes off 6d. now, why should he not alter that half now? Does not that affect thrift? Of course it affects the future. Once you start altering this, you begin repudiating what are, in fact, bargains. They may not be signed, sealed and delivered in a particular legal form, but they are bargains which have been respected by this House for the last 30 years, respected again when they came under discussion in 1918, and ever since that time have been maintained by every Chancellor of the Exchequer, including the right hon. Gentleman. Previously he has not done this, but now he thinks that he can get 6d. Next year he may think that he can get, not 6d. from these people, but 4s., and 2s., or 2s. 3d. from those with incomes under £2,000 a year.
The right hon. Gentleman started to explain this Resolution by saying that it ought to be passed or otherwise people would obtain back more than they had actually paid in Income Tax. No one wants the Revenue to lose or to pay back more than has been paid in Income Tax. That is a very simple proposition. It does not entail repudiation. It does not damage thrift, but it does do justice to the Exchequer as against those who might claim against the Exchequer. I ask the Chancellor of the Exchequer, therefore, to withdraw this Resolution altogether and to substitute for it one which protects him by saying that no one shall receive back in rebate more than he has actually paid. If he will not do that, then when the Finance Bill comes before Committee I shall put down an Amendment to that effect.
As I understand the position, there are only three parties to these pre-1916 policies—the insurance companies, the policy-holders and the State. The State encouraged these policies to be taken out by saying that the insured person would get Income Tax
rebate on them. The State is now going back on that and is saying: "We are going to modify that, and now that you have taken out the policy you cannot help yourself. You are in the cart and we are going to take advantage of the position." I can understand in times of war and great national stress, when the safety of the country is at stake, extra-ordinary things being done, but in a time like this, even with all the distress which we have, I cannot understand why the Chancellor of the Exchequer should so damage the credit of the country by doing a thing of this character. It is like petty larceny to take this £150,000. It is a miserable thing to do, and it is still more regrettable to say that there are only a few of them and that they have a good deal of money and do not mind. He ought to keep his word to gentlemen of means as well as to gentlemen with no means. The Under-Secretary of State for Air stated the other night, when somebody said that there was a great feeling of indignation somewhere about something, there was only 2 per cent. A man can feel indignant at a wrong done which does not affect him personally, because a wrong done to one individual is a wrong done to the whole body politic, and as Thomas Carlyle said:
There is not a wrong being done in any part of the world but the whole world smarts for it.
It is a definite going back. It is going to damage the State's credit, and credit is good name, and good name is capital. The man with commercial ability can always find capital. A man who has always plenty of money and business once said to me that here are very few men with character and capacity. If the State infringes on capital and credit its good name will go and capital will feel no sense of security. If you know your burdens you can face them, but if you do not know whether the Chancellor of the Exchequer is going to come out every April like a thief in the night and deprive you of something which has been yours for half a century what is going to be the result? I know of one case of an estate valued at £200,000. There was nothing to meet the situation when six months had elapsed. This method of insurance is adopted by prudent people so that they can remain solvent and not have all their property broken up. This
is now being imperilled because, even though the amount is not great, there is a suspicion of bad faith and I think that the Chancellor of the Exchequer of this country should, like Caesar s wife, at least be above suspicion.
I should like to say a few words with regard to the pledges which have been challenged by Members on the opposite side. I want to remind them that in 1926 pledges went by the board quite easily. I refer to the crisis which obtained then. We as miners received a seven-hour day in 1919. That was a pledge to the country. In the elections which were fought no mention was made of any future alteration of hours. Did the Tory party consider that that was a pledge? Did they stand by that? No, when the time suited them and the cry for some action came the position was entirely changed. To-day the Chancellor of the Exchequer wants some money. The Chancellor of the Exchequer has gone to the place where he thinks he can get it. It would have suited the other side much better probably if he had gone to the poor and spread it over a lot of people so that no one would have really known about it. The Chancellor of the Exchequer is now devoting himself to the party opposite who can afford to pay. It is quite easy to find out where the shoe pinches. As long as it does not trouble hon. Members opposite all goes well with them, but when it comes upon their shoulders there is a big cry about broken pledges and about capital being driven out of the country and all that kind of thing. I hope that the Chancellor of the Exchequer will not take any notice of that kind of threat. I hope that it will simply be like pouring water on to a duck's back and that it will have no effect at all. In spite of this hon. Members opposite will try to accumulate as much as they can. I want the Chancellor of the Exchequer to watch to try to prevent, if he can, the passing away of this money before death takes place. One hon. Member, speaking about what this would mean, said that there would be transferencies of fortune before a man died.
Hon. Members must keep to the point at issue. It is strictly limited to whether or not there should be certain rebates on a certain class of policies, and the hon. Member must keep to that point.
That statement has been made before. I have been in the House during the whole of the Debate, and except for some slight deviation Death Duties have not been raised on this Amendment which we are discussing. Hon. Members must in any case accept my definite ruling. I am not prepared to allow further deviation on this matter.
I will not dispute the point with you, and I accept your Ruling. If I have wandered from the main point I apologise. It was not my intention to go outside the point. I hope that the Chancellor will not be diverted by threats from the other side, and that he will stick to the point which he has outlined in his policy.
May I ask the Chancellor or the Financial Secretary to reply definitely to this question because I want it on record in the OFFICIAL REPORT. If this Resolution goes through un-amended what policies will be affected and what will be the date of the policies? How far would it go back? And what would be the dates of the policies that would be affected?
If this Resolution goes through the effect will be that 4s. is substituted for 4s. 6d. Of course, that affects all policies, but it is subject to the other provision which will be put into the Finance Bill and which has not yet appeared in a Resolution, that so far as the first £250 is concerned the rate will be only 2s. in the £ instead of 2s. 3d. The policies of persons whose incomes are above a certain figure are affected in the various categories concerned.
|Division No. 273.]||AYES.||[6.5 p.m.|
|Acland-Troyte, Lieut.-Colonel||Ferguson, Sir John||Monsell, Eyres, Com. Rt. Hon. Sir B.|
|Albery, Irving James||Fermoy, Lord||Morris-Jones, Dr. J. H. (Denbigh)|
|Allen, Sir J. Sandeman (Liverp'l., W.)||Fison, F. G. Clavering||Morrison, W. S. (Glos., Cirencester)|
|Ashley, Lt.-Col. Rt. Hon. Wilfrid W.||Foot, Isaac||Muirhead, A. J.|
|Aske, Sir Robert||Ford, Sir P. J.||Nathan, Major H. L.|
|Astor, Viscountess||Fremantle, Lieut.-Colonel Francis E.||Newton, Sir D. G. C. (Cambridge)|
|Atholl, Duchess of||Galbraith, J. F. W.||Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)|
|Baldwin, Rt. Hon. Stanley (Bewdley)||Ganzoni, Sir John||Nield, Rt. Hon. Sir Herbert|
|Balfour, George (Hampstead)||Gault, Lieut.-Col. Andrew Hamilton||O'Neill, Sir H.|
|Balfour, Captain H. H. (I. of Thanet)||George, Major G. Lloyd (Pembroke)||Owen, Major G. (Carnarvon)|
|Balniel, Lord||George, Megan Lloyd (Anglesea)||Peake, Captain Osbert|
|Beaumont, M. W.||Gilmour, Lt.-Col. Rt. Hon. Sir John||Penny, Sir George|
|Betterton, Sir Henry B.||Glassey, A. E.||Peto, Sir Basil E. (Devon, Barnstaple)|
|Bevan, S. J. (Holborn)||Glyn, Major R. G. C.||Pilditch, Sir Philip|
|Birchall, Major Sir John Dearman||Grace, John||Pownall, Sir Assheton|
|Bird, Ernest Roy||Graham, Fergus (Cumberland, N.)||Preston, Sir Walter Rueben|
|Birkett, W. Norman||Grattan-Doyle, Sir N.||Purbrick, R.|
|Blindell, James||Gray, Milner||Pybus, Percy John|
|Bourne, Captain Robert Croft||Greaves-Lord, Sir Walter||Ramsay, T. B. Wilson|
|Bowater, Col. Sir T. Vansittart||Grenfell, Edward C. (City of London)||Ramsbotham, H.|
|Bowyer, Captain Sir George E. W.||Gretton, Colonel Rt. Hon. John||Rawson, Sir Cooper|
|Boyce, H. L.||Guinness, Rt. Hon. Walter E.||Remer, John R.|
|Bracken, B.||Gunston, Captain D. W.||Rentoul, Sir Gervals S.|
|Brass, Captain Sir William||Hacking, Rt. Hon. Douglas H.||Roberts, Sir Samuel (Ecclesall)|
|Briscoe, Richard George||Hall, Lieut.-Col. Sir F. (Dulwich)||Rodd, Rt. Hon. Sir James Rennell|
|Brown, Brig.-Gen. H. C.(Berks, Newb'y)||Hamilton, Sir George (Ilford)||Ross, Major Ronald D.|
|Buchan, John||Hammersley, S. S.||Rothschild, J. de|
|Bullock, Captain Malcolm||Hanbury, C.||Ruggles-Brise, Lieut.-Colonel E. A.|
|Burgin, Dr. E. L.||Hannon, Patrick Joseph Henry||Russell, Alexander West (Tynemouth)|
|Castle Stewart, Earl of||Haslam, Henry C.||Russell, Richard John (Eddisbury)|
|Cautley, Sir Henry S.||Henderson, Capt. R. R. (Oxf'd, Henley)||Salmon, Major I,|
|Cayzer, Sir C. (Chester, City)||Hennessy, Major Sir G. R. J.||Samuel, A. M. (Surrey, Farnham)|
|Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)||Herbert, Sir Dennis (Hertford)||Samuel, Samuel (W'dsworth, Putney)|
|Cazalet, Captain Victor A.||Hills, Major Rt. Hon. John Waller||Sandeman, Sir H. Stewart|
|Chadwick, Sir Robert Burton||Hope, Sir Harry (Forfar)||Savery, S. S.|
|Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)||Howard-Bury, Colonel C. K.||Skelton, A. N.|
|Chamberlain, Rt. Hon. N. (Edgbaston)||Hudson, Capt. A. U. M. (Hackney, N.)||Smith, Louis W. (Sheffield, Hallam)|
|Chapman, Sir S.||Hunter, Dr. Joseph||Smith-Carington, Neville W.|
|Christie, J. A.||Hunter-Weston, Lt.-Gen. Sir Aylmer||Smithers, Waldron|
|Churchill, Rt. Hon. Winston Spencer||Hurd, Percy A.||Southby, Commander A. R. J.|
|Cohen, Major J. Brunel||Hutchison, Maj.-Gen. Sir R.||Spender-Clay, Colonel H.|
|Colfox, Major William Philip||Iveagh, Countess of||Stanley, Maj, Hon. O. (W'morland|
|Collins, Sir Godfrey (Greenock)||James, Lieut.-Colonel Hon. Cuthbert||Steel-Maitland, Rt. Hon. Sir Arthur|
|Colman, N. C. D.||Jones, F. Llewellyn- (Flint)||Stuart, Hon. J. (Moray and Nairn)|
|Colville, Major D. J.||Jones, Henry Haydn (Merioneth)||Sueter, Rear-Admiral M. F.|
|Courthope, Colonel Sir G. L.||Kindersley, Major G. M.||Tinne, J. A.|
|Cowan, D. M.||King, Commodore Rt. Hon. Henry D.||Todd, Capt. A. J.|
|Crichton-Stuart, Lord C.||Knox, Sir Alfred||Train, J.|
|Cranborne, Viscount||Lamb, Sir J. Q.||Tryon, Rt. Hon. George Clement|
|Croft, Brigadler-General Sir H.||Lambert, Rt. Hon. George (S. Molton)||Vaughan-Morgan, Sir Kenyon|
|Crookshank, Capt. H. C.||Lane Fox, Col. Rt. Hon. George R.||Wallace, Capt. D. E. (Hornsey)|
|Cunliffe-Lister, Rt. Hon. Sir Philip||Law, Sir Alfred (Derby, High Peak)||Ward, Lieut.-Col. Sir A. Lambert|
|Culverwell, C. T. (Bristol, West)||Leighton, Major B. E. P.||Wardlaw-Milne, J. S.|
|Dalrymple-White, Lt.-Col. Sir Godfrey||Lewis, Oswald (Colchester)||Warrender, Sir Victor|
|Davies, Dr. Vernon||Llewellin, Major J. J.||Waterhouse, Captain Charles|
|Davies, Maj. Geo. F.(Somerset, Yeovil)||Locker-Lampson, Rt. Hon. Godfrey||Wayland, Sir William A.|
|Davison, Sir W. H. (Kensington, S.)||Long, Major Eric||Wells, Sydney R.|
|Duckworth, G. A. V.||Lymington, Viscount||Williams, Charles (Devon, Torquay)|
|Dudgeon, Major C. R.||McConnell, Sir Joseph||Wilson, G. H. A. (Cambridge U.)|
|Dugdale, Capt. T. L.||Maclean, Sir Donald (Cornwall, N.)||Windsor-Clive, Lieut.-Colonel George|
|Eden, Captain Anthony||Macpherson, Rt. Hon. James I.||Wolmer, Rt. Hon. Viscount|
|Edmondson, Major A. J.||Macquisten, F. A.||Womersley, W. J.|
|Elliot, Major Walter E.||MacRobert, Rt. Hon. Alexander M.||Wood, Rt. Hon. Sir Kingsley|
|Elmley, Viscount||Maitland, A. (Kent, Faversham)||Worthington-Evans, Rt. Hon. Sir L.|
|England, Colonel A.||Makins, Brigadier-General E.||Young, Rt. Hon. Sir Hilton|
|Erskine, Lord (Somerset, Weston-s-M.)||Margesson, Captain H. D.|
|Evans, Capt. Ernest (Welsh Univer.)||Marjoribanks, E. C.||TELLERS FOR THE AYES.—|
|Everard, W. Lindsay||Meller, R. J.||Sir Frederick Thomson and|
|Falle, Sir Bertram G.||Mitchell, Sir W. Lane (Streatham)||Marquess of Titchfield.|
|Adamson, Rt. Hon. W. (Fife, West)||Baldwin, Oliver (Dudley)||Broad, Francis Alfred|
|Adamson, w. M. (Staff., Cannock)||Barnes, Alfred John||Brockway, A. Fenner|
|Addison, Rt. Hon. Dr. Christopher||Barr, James||Bromfield, William|
|Altchison, Rt. Hon. Craigle M.||Batey, Joseph||Bromley, J.|
|Alexander, Rt. Hon. A. V. (Hlllsbro')||Bellamy, Albert||Brooke, W.|
|Alpass, J. H.||Bennett, Captain E. N. (Cardiff, Central)||Brown, C. W. E. (Notts, Mansfield)|
|Ammon, Charles George||Benson, G.||Brown, Rt. Hon. J. (South Ayrshire)|
|Arnott, John||Bentham, Dr. Ethel||Burgess, F. G.|
|Ayles, Walter||Bevan, Aneurin (Ebbw Vale)||Buxton, C. R. (Yorks. W. R. Elland)|
|Baker, John (Wolverhampton, Bilston)||Bowerman, Rt. Hon. Charles W.||Buxton, Rt. Hon. Noel (Norfolk, N.)|
|Caine, Derwent Hall-||Jones, T. I. Mardy (Pontypridd)||Riley, F. F. (Stockton-on-Tees)|
|Cameron, A. G.||Jowett, Rt. Hon. F. W.||Ritson, J.|
|Cape, Thomas||Jowitt, Rt. Hon. Sir W. A.||Roberts, Rt. Hon. F. O. (W. Bromwich)|
|Carter, W. (St. Pancras, S. W.)||Kennedy, Thomas||Romeril, H. G.|
|Charleton, H. C.||Kenworthy, Lt.-Com. Hon. Joseph M.||Rosbotham, D. S. T.|
|Chater, Daniel||Kinley, J.||Rowson, Guy|
|Church, Major A. G.||Knight, Holford||Salter, Dr. Alfred|
|Clarke, J. S.||Lang, Gordon||Samuel, H. W. (Swansea, West)|
|Cluse, W. S.||Lansbury, Rt. Hon. George||Sanders, W. S.|
|Clynes, Rt. Hon. John R.||Lathan, G.||Sandham, E.|
|Cocks, Frederick Seymour||Law, A. (Rosendale)||Sawyer, G. F.|
|Compton, Joseph||Lawson, John James||Scrymgeour, E.|
|Daggar, George||Lawther, W. (Barnard Castle)||Scurr, John|
|Dallas, George||Leach, W.||Sherwood, G H.|
|Davies, E. C. (Montgomery)||Lee, Frank (Derby, N. E.)||Shield, George William|
|Davies, Rhys John (Westhoughton)||Lee, Jennie (Lanark, Northern)||Shillaker, J. F.|
|Day, Harry||Lees, J.||Shinwell, E.|
|Denman, Hon. R. D.||Lewis, T. (Southampton)||Short, Alfred (Wednesbury)|
|Dickson, T.||Lindley, Fred w.||Simmons, C. J.|
|Dukes, C.||Lloyd, C. Ellis||Sinkinson, George|
|Duncan, Charles||Logan, David Gilbert||Smith, Alfred (Sunderland)|
|Ede, James Chuter||Longbottom, A. W.||Smith, Ben (Bermondsey, Rotherhithe)|
|Edge, Sir William||Longden, F.||Smith, Frank (Nuneaton)|
|Edmunds, J. E.||Lovat-Fraser, J. A.||Smith, H. B. Lees- (Keighley)|
|Edwards, C. (Monmouth, Bedwellty)||Lunn, William||Smith, Rennie (Penistone)|
|Edwards, E. (Morpeth)||McEntee, V. L.||Smith, Tom (Pontefract)|
|Egan, W. H.||Mackinder, W.||Snell, Harry|
|Freeman, Peter||McKinlay, A.||Snowden, Rt. Hon. Philip|
|Gardner, B. W. (West Ham, Upton)||Maclean, Neil (Glasgow, Govan)||Snowden, Thomas (Accrington)|
|Gardner, J. P. (Hammersmith, N.)||MacNeill-Weir, L.||Sorensen, R.|
|Gibbins, Joseph||McShane, John James||Stamford, Thomas W.|
|Gibson, H. M. (Lancs, Mossley)||Malone, C. L'Estrange (N'thampton)||Stewart, J. (St. Rollox)|
|Gill, T. H.||Mansfield, W.||Strachey, E. J. St. Loe|
|Gillett, George M.||March, S.||Strauss, G. R.|
|Gossling, A. G.||Markham, S. F.||Sullivan, J.|
|Gould, F.||Marley, J.||Taylor, W. B. (Norfolk, S. W.)|
|Graham, D. M. (Lanark, Hamilton)||Marshall, Fred||Thomas, Rt. Hon. J. H. (Derby)|
|Graham, Rt. Hon. Wm. (Edin., Cent.)||Mathers, George||Thorne, W. (West Ham, Plaistow)|
|Greenwood, Rt. Hon. A. (Colne)||Matters, L. W.||Thurtle, Ernest|
|Grenfell, D. R. (Glamorgan)||Melville, Sir James||Tillett, Ben|
|Griffith, F. Kingsley (Middlesbro' W.)||Messer, Fred||Tinker, John Joseph|
|Griffiths, T. (Monmouth, Pontypool)||Milner, Major J.||Trevelyan, Rt. Hon. Sir Charles|
|Groves, Thomas E.||Montague, Frederick||Turner, B.|
|Grundy, Thomas W.||Morley, Ralph||Vaughan, D. J.|
|Hall, F. (York, W. R., Normanton)||Morris, Rhys Hopkins||Viant, S. P.|
|Hall, G. H. (Merthyr Tydvil)||Morrison, Herbert (Hackney, South)||Walkden, A. G.|
|Hall, Capt. W. P. (Portsmouth, C.)||Morrison, Robert C. (Tottenham, N.)||Walker, J.|
|Hamilton, Mary Agnes (Blackburn)||Mart, D. L.||Watkins, F. C.|
|Hardle, George D.||Moses, J. J. H.||Watson, W. M. (Dunfermilne)|
|Harris, Percy A.||Muff, G.||Wellock, Wilfred|
|Hartshorn, Rt. Hon. Vernon||Murnin, Hugh||Welsh, James (Paisley)|
|Hastings, Dr. Somerville||Naylor, T. E.||Welsh, James C. (Coatbridge)|
|Haycock, A. W.||Newman, Sir R. H. S. D. L. (Exeter)||West, F. R.|
|Hayday, Arthur||Oldfield, J. R.||Westwood, Joseph|
|Hayes, John Henry||Oliver, George Harold (IIkeston)||Wheatley, Rt. Hon. J.|
|Henderson, W. W. (Middx., Enfield)||Palin, John Henry.||Whiteley, Wilfrid (Birm., Ladywood)|
|Herriotts, J.||Paling, Wilfrid||Wilkinson, Ellen C.|
|Hirst, G. H. (York W. R. Wentworth)||Palmer, E. T.||Williams, David (Swansea, East)|
|Hirst, W. (Bradford, South)||Parkinson, John Allen (Wigan)||Williams, T. (York, Don Valley)|
|Hoffman, P. C.||Perry, S. F.||Wilson, C. H. (Sheffield, Attercliffe)|
|Hollins, A.||Pethick-Lawrence, F. W.||Wilson, J. (Oldham)|
|Hopkin, Daniel||Picton-Turbervill, Edith||Wilson, R. J. (Jarrow)|
|Horrabin, J. F.||Pole, Major D. G.||Winterton, G. E.(Leicester, Loughb'gh)|
|Hudson, James H. (Huddersfield)||Potts, John S.||Wise, E. F.|
|Isaacs, George||Price, M. P.||Young, R. S. (Islington, North)|
|Jenkins, W. (Glamorgan, Neath)||Quibell, D. J. K.|
|John, William (Rhondda, West)||Raynes, W. R.||TELLERS FOR THE NOES.—|
|Jones, J. J. (West Ham, Silvertown)||Richardson, R. (Houghton-le-Spring)||Mr. William Whiteley and Mr. T.|
|Jones, Morgan (Caerphilly)||Riley, Ben (Dewsbury)||Henderson.|
Twelfth Resolution read a Second time.
I wonder how many hon. Members and right hon. Mem- bers understand what this Resolution really means. It is not my intention to give my own interpretation of it as being correct, nor is it the intention of hon. Members on this side of the House to oppose it, but I must ask the Chancellor of the Exchequer to explain what it really does mean and whether my reading of it is correct. I have gone to some considerable trouble to find out exactly what it means. I take it that paragraphs (a) and (b) of the Resolution should be read together, and if my interpretation of it is correct I am quite prepared to accept it. I think paragraph (a) means this; that the only alteration is that Sub-section (2) of Section 211 of the Act of 1918 will apply in future to preference dividends. If a limited company paying dividends has deducted too little by way of Income Tax, it can take the necessary amount off the next dividend.
Now I come to paragraph (b), and I really must protest against a sentence of 150 words without a full stop. How is it possible for any layman to understand a sentence constructed in this way? That long and involved sentence presumably means that the gross amount shown on a dividend warrant must be adjusted by the taxpayer when he makes his return so that the variation, greater or less, is disclosed by the taxpayer. That is to say, that as the amount stated by the company on the voucher cannot be altered, for physical reasons, the taxpayer must make the alteration when making his return. Presumably it means that the next voucher issued by the company will show the adjustment. If that is so I do not propose to offer any opposition to the Resolution, but I should be obliged if the Financial Secretary will say whether I am right, and put the matter in plain English.
So far as paragraph (a) is concerned, the hon. Member is quite correct. It refers to preference dividends, and extends to them the principle which hitherto has applied to debenture interest. So far as that point is concerned the hon. Member is quite correct. As far as paragraph (b) is concerned, I am not quite clear whether I understood him correctly. Paragraph (b) refers to the payment on ordinary shares, and so far as those are concerned the arrangements under paragraph (a) do not apply. Under paragraph (a), if there is any failure to pay the whole Income Tax on preference shares in May, it can be made up in November, but so far as paragraph (b) is concerned, that is not the method of dealing with ordinary shares. Whatever is the net amount that the taxpayer receives on ordinary shares it is regarded as the net amount he should have re- ceived if the right deduction had been made for Income Tax purposes, and, therefore, the gross amount before the deduction of Income Tax is greater than that which appears on the dividend warrant.
Let me give one illustration. Suppose there are preference shares of 5 per cent. and a person holds £100 worth. He is entitled to £5 dividend. When the tax was 4s. in the £, one-fifth of that was deducted, and he actually received £4. The rule under paragraph (a) is that when it comes to the autumn dividend, the taxpayer will receive less than £5, with 4s. 6d. subtracted, in order to make up for the fact that he has received too much in the spring. When it comes to the receipts from ordinary shares the method adopted is quite different. Suppose a company declares a dividend of 5 per cent., it will show on the dividend warrant £5 less £1 Income Tax deducted at 4s. in the £, and the shareholder will receive £4. That £4 is regarded as the tax free dividend which that shareholder has received, and it is equivalent to a larger amount than £5 from which the correct tax of 4s. 6d. has been deducted. As far as the preference shareholder is concerned the amount will have to be made up in the autumn. As far as the ordinary shareholder is concerned the amount is correct.
Debenture interest is covered by the existing law. Broadly speaking, there are three kinds of income, debenture, preference and ordinary share dividends. Debenture interest is covered by the existing law, preference dividends are covered under paragraph (a) and ordinary share interest under paragraph (b).
I should like to ask for information on one point. The holder of ordinary shares, receiving income in dividends on those shares, receives, or has received them in the past, less Income Tax for which he is liable, and, therefore, he has not had to pay any tax himself in respect of those dividends. Am I right in saying that under this Resolution he will now in certain cases have to pay a small amount of Income Tax direct?
No, he will not have to pay any amount himself. The only difference is that he will be regarded as having received more than £5 in gross payment; about £5 3s. 4d. His gross receipts from the company will be regarded as having been £5 3s. 4d., on which after deduction of Income Tax he receives actually £4.
It gets the tax not from the individual shareholder but from the company. The result is the same as if the company, as it is free to do, had declared a 4 per cent. tax free dividend. If instead of declaring a 5 per cent. dividend, subject to deduction of tax, it declares a 4 per cent. dividend free of tax, as it is perfectly entitled to do, it makes no difference to the revenue. The position will be perfectly clear. The idea is to put the two cases on the same footing. The company pays revenue to the Government on the profit it makes, and it is only when it comes to pay a dividend to its shareholders that it recovers from the shareholders the Income Tax in consideration of the amount it has paid to the Government on its profits.
Only as far as preference shares are concerned. The tax has gone up in the meantime, and the holder of the preference shares has received too much cash in the spring. His successor will be mulct of the additional amount. This will, no doubt, be reflected in the price of the shares, so that there is no real injustice to preference shareholders. As far as ordinary shares are concerned, it only affects the actual dividend which the company chooses to pay. It is arguable that the company might not have declared such a large dividend, but, if that is so, that again will be reflected in the price of the shares.
I wish to draw attention to a point which strikes me as rather strange in the explanation which has been given. The Government do not intend, apparently, to deal with debentures, but in regard to preference shares they make one alteration in the law of assessment for Income Tax and in the case of ordinary shares they make another. What reason can they advance for this difference in treatment? It has already come out in the discussion that the advisers of the Government anticipate that this treatment of the preference shares will be reflected in the price of those shares when they are sold, and no doubt that is so, but why should the shares be subject to this alteration in price as a result of there being this additional charge on them at the next distribution of preference dividend? It is an injustice to the man who has held his shares but for some reason or another is compelled to sell them in order to raise money. The man will sell his shares at a less price because, in the matter of dividend, the shares have received more than the Government propose that they should receive under the terms of this Budget, and the next purchaser fixes the price accordingly, as the Government anticipate he will do. It is a complicated matter and a technical matter, but it does inflict an injustice. The Government may say that it is only a little one, hit that is no answer, because there may be large transactions.
Now I will deal with the case of the ordinary shares. The result of the arrangement which the Government propose will be that a company will have to pay a higher rate of Income Tax but will only be entitled to deduct the rate of tax which this resolution lays down, that is to say, a lower rate of tax. Either the company declaring its dividend is, according to the Government theory, going to declare a fictitious dividend higher, for the purposes of this. Resolution, than they did declare, or they are going to declare the tax on this dividend as if they had declared a higher dividend and had to pay the difference in tax themselves. This is a most astounding way of muddling and confusing an ordinary commercial transaction. Why should we be troubled with all these Income Tax questions arising out of the complications of the regulations under various Finance Acts? We ought not to pass these Resolutions in the form in which they are without a clear explanation from the Government as to the grounds on which they are prepared to support them. What we want is a clarification of the assessment of Income Tax and the simplification of rules, so that the unfortunate taxpayer may know more clearly where he stands, and not find himself involved in much correspondence, often costly, because he has to take advice, and often producing little or no result, because of the obscurity of the rules and the multiplication of advisers by whom he is surrounded.
I think there is a certain amount of reason behind the action of the Government, though hon. Members in some parts of the House perhaps do not yet realise it. There is a distinction between debenture interest, preference interest and ordinary share interest. The first two are fixed rates of interest, not dependent on the profit earned or the period at which the dividend is declared. It may be paid a few months later, but it is paid at a specific period and at a specific rate. In the case of ordinary shares the dividend to be paid is at the option of the directors of the company. They may pay that dividend subject to deduction of tax or tax free. Apparently for some purpose of the revenue of which, I confess, I do not see the advantage, the Government have decided that the tax on ordinary shares shall be treated as having been deducted at the rate of 4s. 6d. instead of at whatever rate it may have been deducted and that the net amount of that dividend shall be regarded as a tax free dividend and Income Tax at the rate of 4s. 6d. added to it. If the House follows out the effect of that, they will see it means this. I have worked a sum so as to show how the figures come out, and for convenience have taken the amount of dividend as £38 15s. Income Tax deducted at the rate of 4s. would give a net dividend of £31, but under this Clause anybody receiving a dividend of £31 would be regarded by the revenue as having received an income not of £38 15s., but an income of £40, on which tax of £9 had been paid. I think I am correct in this—that it means that the small receiver of dividends who is entitled to recover Income Tax on his dividend will not recover £7 15s., but will be able to recover £9, because this dividend will be treated as £40 dividend with £9 tax deducted; but the Surtax payer will be regarded as having received a dividend of £40 and not a dividend of £38 15s. The effect is that there is an advantage to the receiver of income who is entitled to reclaim tax, but there is a small disadvantage to the Surtax payer, who will find his income regarded as being on a slightly higher level.
I gather that this Resolution is meant to operate so as to bring about an adjustment where there is a reduction of the standard rate of Income Tax. If that be so, I assume that the Resolution is to be incorporated in a new law. Will the Chancellor of the Exchequer be so good as to give me some explanation as to the method by which it is proposed to give effect to this suggested amendment of the law? At present the Resolution is simply a blank cheque.
This simply extends to preference dividends the rules at present applied to debentures. It is the converse of the Resolution which we have just carried so far as preference dividends are concerned. If there had been a reduction of the rate of tax from 4s. to 3s. 6d., the person holding preference shares who had paid tax at the rate of 4s. on them would be entitled to an extra allowance in the autumn to make up for the inadequate amount he has received. He would be entitled to receive the larger dividend in the autumn because too much Income Tax had been deducted in the spring, and again that would be reflected in the price of the shares.
This Resolution deals with what are known as the single premium policies. It provides the machinery for taking the action which we announced would be taken to deal with this practice. This Resolution is rather widely drawn, but when the Clauses appear in the Finance Bill the House will find that legitimate life insurance has been very fully protected. I hope the House will agree that it is hardly desirable to discuss this subject at great length now. We have an understanding with the Opposition that we shall get all these Resolutions before dinner. [HON. MEMBERS: "No!"] Oh, yes, we have, a very definite undertaking. The Prime Minister announced it in the statement on Thursday about business. It was an understanding arrived at through the usual channels, and it was repeated on Thursday night. The House will remember that I have not asked it to sit late upon any of the days when we have been discussing these Resolutions. We have risen at Eleven o'clock, the ordinary time.
I speak subject to correction, but I had understood that there was not anything in the nature of a binding bargain that it should all be disposed of by 7.30. There is no fundamental difference of opinion about concluding business at a reasonable time, but I do not think that a fixed time was arrived at between the two sides.
I do not wish to detain the House in coming to a decision, but I think that something further should be said on this Resolution because the Government have promised a very substantial change in the form which it takes. That is the point which I wish to raise. First of all, the Chancellor of the Exchequer has been obliged to make some change in regard to what are known as short-term endowment policies. I would like to ask if that proposal need be retrospective. There is a well-known principle in our law that a subject who can place himself outside taxation is entitled to do so. That principle has descended to us from the day taxes were paid to kings, and it ought to inure now when taxes are paid to such an autocratic person as the Chancellor of the Exchequer. If these Surtax payers were within the law when they took out their single premium policies, I suggest that they should not be told now that they are outside the law.
I want to raise another point: under the Resolution as drawn no payment made in respect of money borrowed in regard to any policy can be a deduction against the income assessable for Surtax. As the Resolution stands, a man might want to provide by a perfectly proper insurance a life policy for his wife and family, and for this purpose he might mortgage certain property in order to pay the premium on that policy. If that man, instead of mortgaging his property for an insurance policy, simply spent the interest on his money, it could be deducted in his Surtax return, but because he employs that money to insure his wife and children he is unable to do that. In the case of an endowment policy also that may be quite a proper transaction.
Let me give an instance of a man who may be under a contract, which often occurs in a marriage allowance, to find £1,000 or more on his death, or within a term of years of, say, 10 years. That man, if he likes, may borrow the money from his bank, and if he does so he can deduct the interest on that money from his surtaxable income. But if tthis Resolution is passed, and that man decides to take out an endowment policy for 10 years, then he cannot deduct the premiums from the surtaxable income, if he borrows those premiums. It comes to this, that every commercial transaction involving a loan does not come under this arrangement except when the loan is devoted to insurance, and surely that cannot be a just arrangement. When we see the Finance Bill I hope that many of these defects will be remedied, but I would like to make one simple sugges- tion. Could not the Chancellor of the Exchequer do what he wants to do not by all these elaborate provisions, but by ruling out for tax deduction all short-term endowment policies, but excluding therefrom long-term endowment policies, thus giving the latter the benefit of tax deduction? In addition, I would like to ask the right hon. Gentleman if he could limit in some way the scope of single premium policies.
I think the right hon. and gallant Member is now going outside the scope of this Resolution. We must confine ourselves to the discussion of what is contained in the Resolution, and the right hon. and gallant Member cannot suggest the introduction of new proposals.
I was glad to hear what the Chancellor of the Exchequer said with regard to the intention of the Government as indicated in this Resolution, although its terms are very wide. The intention, I understand, is to see that what is really a substantial amount of life insurance is adequately protected.
Sir F. HALL:
I am entirely with the Chancellor of the Exchequer in protecting the Treasury against the evasion of the Surtax in regard to these insurance policies. Anyone who has studied the question of insurance must agree that these endowment policies should receive careful consideration at the hands of the Chancellor of the Exchequer, because there is such a wide difference between single premium policies, five-year policies and 20-year policies. A 20-year policy is looked upon as a reasonable form of insurance for the protection of a wife and children, or for other purposes. For example, when a man gets married he may take out a 20-year policy with a view of afterwards placing it in some form of investment, and there is a vast difference between the policies taken out for one party, and one party alone.
Although I am averse from some of the policies which have been taken out in the past, nevertheless I am more averse to retrospective legislation in regard to this question, and I think that is one of the worst features we could possibly have. It has always been recognised that if you can legitimately save taxation you are entitled to do so. By all means let us tighten up the law in order that there cannot be any evasion, but I think we should know, when legislation has been in operation, that no distinction is made between the part of the money which has been borrowed. There should be one thing in common, and it is that legislation should not be passed by this House of a retrospective nature, which I abhor and loathe.
With regard to policies which have been taken out, I am going to ask the Chancellor of the Exchequer to give to them that careful consideration which has been recognised in all legislation up to the present time. Never mind what has taken place in the past, because we must grin and bear those evils, but let us take steps to see that a stoppage is put to the practice which is now taking place in regard to certain forms of insurance.
I believe we have been told that deductions which have been made under a single-premium policy will no longer be allowed. Does that mean that there will be any attempt to recover those deductions?
I think that the Chancellor of the Exchequer is right in dealing with the abuses in regard to loans for a single premium, but there may be cases of amounts of £1,000 where there may be no abuse whatever, and no excuse for not allowing the interest on the £1,000 to come into the arrangement. It is when assurances include large sums of borrowed money that the abuse is most manifest. I would like the Chancellor of the Exchequer to remember that point, and to see if there is not a point at which this practice might still be permissible to some extent. A man who is normally insured for £1,000 and pays in one premium gets his remission all right, but if he does the same thing by borrowing a £1,000, which he may be able to obtain at a low rate of interest, he gets no rebate for the amount of money borrowed. That is the only point which I wish to make. I think we are generally in agreement with the Resolu- tion, and we are all agreed that something should be done to stop what is known to be a very serious abuse of this tax.
The resulting legislative proposals will, I understand, be something very much narrower than the full extent of this Resolution. The point I wish to make—and it is not a point definitely against the Resolution—is a point of Parliamentary procedure, which I regard as being of some importance. I do not think that these Financial Resolutions ought to be so drawn so immensely wider than the intentions of the Government as to the ultimate resulting legislation. The whole object of this Financial Resolution is to draw the public attention, and the special attention of this House, to taxing proposals of the Government and the effect of them when they are carried is that the Government cannot go beyond the limits of that Resolution in imposing taxation. Now, if we are going to have a habit of passing in this House resolutions giving power to impose a tax very much more widespread than is intended, we are going to strike a very serious blow at one of the most valuable parts of the procedure of the House, and of the safeguards against new taxation.
It is a complicated matter to explain, but I think I can explain it in a few sentences. The House is aware that the principle on which at present you base the obligations of Income Tax payers is that you measure one year by the standard of the previous year. That involves that then there must always be one year which is taken twice. In the first year, you have no previous year which you can take at all, and consequently you take the actual profits of that year. In the second year of the business you take that period over again as being the standard, namely, the amount made in the previous year. The year One always comes twice therefore in a new business, but at the present time you give the taxpayer this option. If he prefers, in the case of hardship, instead of paying on year Two as measured by year One, he can pay on the actual profits of year Two. We are proposing to give him an option, instead of paying on the actual profits of year Two, to extend his option to years Two and Three. We are going to make him, if he wishes to exercise his option, exercise it in regard to both years Two and Three.
No, the actual profits of years Two and Three. He can pay if he likes on the actual figures of year Two and year Three instead of the present situation when he pays on the actual figures of year Two. The reason is this: If you get a business with a good profit in the first year, the fact is that that first year is taken three times over at the present time. It applies to a business partly started and begun in the first year, it applies to the second year and to the third year. I can explain it if it is desired. It is very difficult to follow without writing it out on paper. You really want a blackboard. It is quite plain. You apply part of the first year to the second and third year. That may work hardship to business with a bumper first year. On the whole, it is thought more fair and equitable to the taxpayer if we extend the option he at present enjoys to year Two to year Three also. We tell him that, if he is going to exercise the option on year Two, he must exercise it on year Three also. It applies only to a very limited number of cases.
I beg to move, to leave out lines 7 to 39 and to insert instead thereof the words:
|Exceeding||100||and not exceeding||1,000||1|
|Exceeding||1,000||and not exceeding||5,000||2|
|Exceeding||5,000||and not exceeding||10,000||3|
|Exceeding||10,000||and not exceeding||15,000||4|
|Exceeding||15,000||and not exceeding||20,000||5|
|Exceeding||20,000||and not exceeding||30,000||6|
|Exceeding||30,000||and not exceeding||50,000||8|
|Exceeding||50,000||and not exceeding||75,000||9|
|Exceeding||75,000||and not exceeding||100,000||10|
|Exceeding||100,000||and not exceeding||125,000||12|
|Exceeding||125,000||and not exceeding||150,000||14|
|Exceeding||150,000||and not exceeding||175,000||16|
|Exceeding||175,000||and not exceeding||200,000||18|
|Exceeding||200,000||and not exceeding||250,000||20|
|Exceeding||250,000||and not exceeding||350,000||22|
|Exceeding||350,000||and not exceeding||500,000||24|
|Exceeding||500,000||and not exceeding||750,000||26|
|Exceeding||750,000||and not exceeding||1,000,000||28|
|Exceeding||1,000,000||and not exceeding||1,500,000||30|
|Exceeding||1,500,000||and not exceeding||2,000,000||32|
|Exceeding||2,000,000||and not exceeding||—||34|
That is the first fault of this tax, and now I wish to say a word on its social and economic effects. They are important. I must remind the House that it is some time since we had a Debate on this subject. Ordinarily under the Finance Bill the question of debating Death Duties can only be brought up on a new Clause and these new Clauses have a knack of arriving at an early hour of the morning when the Committee is tired and it is impossible to have suitable discussion on the subject. I am grateful to the right hon. Gentleman for this only, that by putting down this Resolution he has at least enabled us to debate it this time at a reasonable hour. One of the effects of this tax on Death Duties is that you are taking away from the capital of the country every day and using it as income. We all know what happens to the individual who, finding his income not sufficient for his needs, says, "I will draw on my capital" and sells a few shares. In due time the income does not increase, and the individual finds himself getting closer and closer to the bankruptcy court. I do not think there is any difference between the law relating to human beings and that relating to nations. A nation cannot go on spending its capital and living on its capital without ultimately diminishing the amount of capital it enjoys, and capital is one of the things which we need to-day. To spend any portion of that capital as income seems to me to be suicidal folly.
The only possible justification that I can see for a tax of this kind is in order to meet the Sinking Fund, because in that case it is true that you are taking capital from one section and using it to repay a capital debt. If the right hon. Gentleman had confined his collection of Death Duties to such a figure as would have brought in exactly the amount required for the Sinking Fund-about £55,000,000 at the present moment—he would have had a very good case to justify his Amendment. I do not know whether my Amendment would produce that figure. I have not worked it out, but it seemed to me that roughly cutting down the total amount one-third should bring approximately what was needed by the Sinking Fund at present. I refer to the ordinary Sinking Fund under the Finance Act, 1928. I am not including in my calculations the £5,000,000 extra which the right hon. Gentleman is putting on this year, as that seems to me to be a piece of unnecessary legislation.
I wish to refer to the effect of Death Duties on land very briefly because other hon. Members wish to deal with it. One of the effects of heavy Death Duties is inevitably to break up landed property. You have got to pay Death Duties, and the only thing out of which you can pay it in many cases is by a sale of the property. The effect of that has been disastrous to agriculture. Very often the sitting tenant has to find the capital needed to prevent his leaving his farm, capital which would have been far better spent upon the land, but which is being used for the purposes of taxation. There are far more serious economic and social effects. Take the case of a manufacturing business owned by two or three partners and not a limited company. One of the partners dies. What is going to happen? The Chancellor said the other day that the bulk of the capital of this country is represented by buildings, machinery and things of that sort.
What is the position of the unfortunate firm, one of whose partners has died and who has to find these heavy Death Duties? Although the capital consists of these buildings and machinery, if they were to say to the Chancellor of the Exchequer, "Here is our capital consisting of these buildings and machinery. We offer you one or two of the machines," he would not be grateful. I do not think he has power to accept such an offer, but, if he did, the Treasury would not be grateful to him. What is that business to do? Those who own it can either sell the business to somebody else, probably a limited liability company, or go to the bank and borrow the money to pay those debts on the business. The effect is that a heavy mortgage has been placed on the business, and that the bank will have a great deal more to say about the business than the people who own it, which will be a thoroughly bad thing from the point of view of the public, of trade, and, last but not least, of the employés.
Any taxation that is likely to have that effect, however tempting it may be to the Exchequer for the moment as a method of raising revenue, is socially disastrous to the country. Taxation of this kind is causing the extinction of the private firm and compelling businesses to turn themselves into limited liability companies, whether they like it or not. I do not believe that the compulsory form of limited liability company is one that is good for the trade of the country or one that ought to be encouraged by our taxation, and this form of taxation is encouraging it. It has been truly said that a corporation has neither a body to be kicked nor a soul to be damned. There are many complaints that in businesses to-day you do not get that human relationship between employer and employed which distinguished many of the older private firms. You are now dealing more with the general manager, who is responsible to the shareholders. I cannot think that that is good for the country or for the employés. Anything that tends to cripple personal initiative is bad all round. By this form of taxation the Chancellor of the Exchequer is loading the dice against the individual and in favour of the joint stock companies. That is one of the worst features of this tax.
Another effect of the tax is that it tends to deplete the source of revenue. Chancellors of the Exchequer for some years past have found, to their surprise, that Income Tax and Super-tax has not quite come up to expectations. The high rate of Death Duties has had a good deal to do with that, because you cannot break up these large fortunes and then expect to be able to get the same amount by taxing large incomes; the incomes will not be there. If the Chancellor of the Exchequer adopts this system in order to effect some form of distribution of the wealth of this country, he will inevitably be bound to seek some other method, and I think he will find that, in his difficulty, he will have to go in for a general import duty all round, because there will be no other method of financing an expensive Government.
I beg to second the Amendment.
I want to make it clear at the outset that I am not here to plead the cause of the squealing capitalists. I am here to deal with the question of Death Duties as being vicious and against the best interests of the Treasury, the State and the people. When the Chancellor of the Exchequer made a broadcast with respect to his Budget he referred to it as an inevitable Budget. I would ask him whether Death Duties are included in the word "inevitable." If they are so included, and if the Death Duties are to be increased and are to go on increasing, it means inevitable disaster for the country and for the people. Death Duties are wrong in principle because they take the capital of the country and use that capital for income purposes. The Chancellor of the Exchequer said the other day: "I believe that the distribution of wealth calls for reform." One of his more extreme colleagues, the First Commissioner of Works, speaking at West Ham, said that the Government were going to take more money from the rich by taxation, and in that way they would raise the standard of living of the people. No more cruel and fallacious gospel was ever preached to the people of this country. In view of these two statements, we may take it that the policy of the Government is, in some measure, to use its political power for the distribution of wealth. The increase of the Death Duties is intended to serve a double purpose, first, to raise money and, secondly, to materialise a political theory.
What is the Chancellor of the Exchequer's real opinion about the distribution of wealth by means of increased Death Duties? I am afraid that the right hon. Gentleman sometimes speaks with two voices. The other day, when he broadcast to the United States, he complained bitterly that our people are the most heavily taxed in the world, and that Income Tax of 4s., Super-tax running up to another 6s. and Death Duties amounting, as they did then, to 48 per cent. no more than provided two-thirds of the annual debt charges, war pensions and the Fighting Services. He went on to say:
With such a burden as this upon our shoulders, with all the destruction, all the waste, all the sacrifice, all the disorganisation of industry and society that it implies, is it any wonder that we have suffered industrial depression after the War.
T have had many occasions to be grateful to the Chancellor of the Exchequer for kind advice and friendly help and I am sorry for him, because circumstances have put him into the position of being—I do not say that he is one—a hypocritee. He has to come to this House and to try to carry out political theories, but when he gets on to the Front Bench and has the responsibility of office he finds that it is impossible to carry out the theories that he and perhaps some of his more extreme friends put forward in a forceful manner in the last election. If the Chancellor of the Exchequer believes in the distribution of capital, why does he not carry out the recommendation of the Divisional Council of Lanarkshire at the Independent Labour Party Conference, and put the Death Duties at 100 per cent., and have done with it? He knows that he cannot do it. He knows that that would mean ruin to the country, and I do not believe that his advisers at the Treasury would, if I may say so with respect, allow him to do it. He takes a line which other men have to take when they are in a difficult position, he compromises, and instead of following the advice of his extreme friends and putting the Death Duties at 100 per cent. he goes half way and puts the Death Duty at 50 per cent. on the large estates, so that instead of entirely ruining the country he only partly ruins it.
The right hon. Gentleman referred, the other day, to the wonderful way, speaking broadly, in which Budget expectations have been fulfilled in the past 10 years, but I would remind him that the word "Budget" has something to do with the future, and I can assure him from my own personal experience in the City that the confidence of the country has never been so severely shaken as it is to-day. I think that his expectations for the future with regard to his budgeting will be falsified. It has always been my opinion of the Chancellor of the Exchequer that when he was faced with the unpleasant duty of taxing someone to meet the annual expenses of the country, he went on the principle of how he could best raise the money and, at the same time, do as little harm as possible to industry. By increasing the Death Duties, the Chancellor of the Exchequer is actuated not by the principles of sound finance but, to placate some of the extremists of his party, he is introducing vindictive legislation. He is breaking the first principle of sound business by using capital for income and revenue purposes. By tightening up the Death Duties, the Chancellor of the Exchequer is making a deliberate attack upon the capital resources of the nation.
I do not expect that this Amendment will be accepted, but when this Government or any Government introduces legislation which we who have some business experience believe to be vicious and harmful to the people, we must at least put on record our opposition and do what we can to bring to the notice of the public and of this House the real danger of legislation of this kind, and try to educate the public and the House with respect to these dangers. In helping this educational process, I want to pay a tribute to the "Times" newspaper for the public-spirited way in which it has called attention to the viciousness of the Estate and Death Duties. The "Times" has given this Government a very fair Press ever since they have been in office, but they do not flinch from publishing leading articles and correspondence which call attention to the danger of increasing Death Duties. I will quote from a leading article in the "Times":
So long as he is feeding upon his seed corn, the improvident peasant may continue to grow a little fatter, but all too soon he starves. This elementary principle, the neglect of which is the fundamental fallacy of Socialism, whether in our time or in the future, applies not merely to Death Duties as such, but to all forms of excessive taxation upon income.
Death Duties are applicable to all kinds of estates. If Death Duties have to be imposed, some estates can stand them better than others. A great deal depends on how the money is employed prior to the death of the person whose estate is the subject of Death Duty. One of the most serious criticisms of the imposition of increased Death Duties is that there is no differentiation and no consideration given, whether a particular industry can stand the depletion of its capital resources or not. Have hon. Members read Lord Lothian's letter in the
"Times" on 1st May? That letter dealt with Death Duties on landed estates from which no income had been received for many years. That letter did not contain any politics. It was full of hard facts and common sense, and if the hard facts and common sense in that, letter are ignored much longer, the day will be even further off when we can do something substantial to help the poorer people of the country and to cure unemployment.
I should like to ask the right, hon. Gentleman the Chancellor of she Exchequer another question. Would it be possible for the accounts of the State to be so presented that capital and income may be distinguished more clearly? It is suicidal to take capital by means of Death Duties out of the landed estates and from the agricultural interests and to spend it as current revenue, mostly in towns. The simplest way in which I can bring home my objection to Death Duties is to take a concrete example, the case of an estate of £2,000,000. It does not matter whether the estate is £2,000,000 or £200; the principle is the same, and it is equally harmful to the community and to the State. Up to the time of the man's death, the whole of that £2,000,000 was in use as capital and was invested in some form of business. When I hear certain hon. Members opposite jeering at people who have a lot of money, I would remind them that money is not kept in old stockings or boxes under the beds, but that it is being used to keep the oil working in the wheels of industry. That £2,000,000 of capital was earning taxable income from which the State benefited in Income Tax and Super-tax, and it produced a yearly revenue. This income was spent in wages, in the purchase of goods, and was distributed each year. It increased the purchasing power of the country and was life-giving. Estate duties are rightly called Death Duties, because it is their duty to deal economic death to the country. Any surplus of the income from that £2,000,000 was reinvested and added to the capital resources of the country.
The man dies and the estate is valued for probate purposes at £2,000,000. His executors examine the estate; they have to realise enough to produce £1,000,000, and the proceeds have to be handed to the Treasury, who use them as part of their income for one year. The effect is that £1,000,000 worth of the capital of the country has been extracted and used for revenue purposes for one year. The State in theory has no money; it has only statutory power to collect from the citizens enough to balance the Budget for the year. Therefore, it is of the utmost importance for the Chancellor of the Exchequer not to hurt or to wound those from whom he and his successors have to draw their revenue. The earnings of the country are being squandered, and the sources of supply will inevitably dry up in time. Private business is run on quite different lines. It tries to save something out of income each year to reduce its capital liabilities, to renew plant and to become efficient. I do not say that the finances of the State and those of a private company are altogether comparable, but the principles which have brought success to private companies cannot be ignored by the right hon. Gentleman the Chancellor of the Exchequer when he is dealing with the finances of the nation.
There is only one excuse for levying Estate Duties, and it is that they should be applied to the extinction of the national debt. I have gone to the trouble to find out the amount that the State put to the Sinking Fund and the amount that it received from Estate Duties during the last 10 years. In 1920–21 the amount put to Sinking Fund was £19.2 millions and the amount received from Death Duties was £47.73 millions. In 1921–22 the figures were: Sinking Fund £22.9 millions and Estate Duties £52.19 millions; in 1922–23 Sinking Fund £21.8 millions, Estate Duties £56.87 millions; in 1923–24, Sinking Fund £40,000,000, Estate Duties £57.80 millions; in 1924–25, Sinking Fund £45,000,000, Estate Duties £59.45 millions; in 1925–26, Sinking Fund £50,000,000, Estate Duties £67.32 millions; in 1927–28, Sinking Fund £65,000,000, Estate Duties £77.31 millions; in 1928–29, Sinking Fund £57.5 millions, Estate Duties £80.57 millions; and in 1929–30, Sinking Fund £47.75 millions, Estate Duties £79.77 millions.
Every year in the last 10 years the State has received more in Estate Duties than it has put to the Sinking Fund, and the total of the last 10 years shows that £211,000,000 more has been received in Estate Duties than was put to Sinking Fund. That £211,000,000 of capital has been taken out of the fructifying pockets of merchants and traders and has been used and squandered by different Governments for many services with which I do not agree. [An HON. MEMBER: "Education."] Education, like all social services, is desirable if we can afford it. We are still living in a post-War period, and we have still to pay for the War, and it may be that we cannot afford, in consideration of our other liabilities, to spend more even on education. I yield to nobody in my desire to improve the social conditions of the people of this country. Many hon. Members in this House think that the revenue from Death Duties is helping to attain that end. I honestly believe that they are wrong, and that the increase in Death Duties, because it takes away capital, puts off the day which we all desire to see when our prosperity will return and when unemployment will disappear.
The hon. Member for Chislehurst (Mr. Smithers), who has just spoken, devoted a large part of his remarks to the fact that the proceeds of the Death Duties, which are the capital of the nation, are devoted to the ordinary current revenue. He rightly says that this is a very undesirable state of affairs. I am sure that nobody would agree with that as a principle more fully and more freely than the Chancellor of the Exchequer himself. However, although it is a perfectly correct economic principle, I cannot help feeling that in the present state of affairs it is a counsel of perfection which is not in fact attainable. After all, all parties for the last 10 years have used the revenue from Death Duties for current expenses. I am sure that nobody more than the right hon. Gentleman the Chancellor of the Exchequer would like to devote this entirely to the purposes of the deficit. Although it is an ideal which we ought to aim at, I doubt whether it is at the present moment within the sphere of practical politics. I have always looked upon the Death Duties as being probably unique as a taxation system almost in the world. I have not studied in detail the taxation systems of other countries, but I should very much doubt whether there is in any other country of the world to-day such a colossal, continuing capital levy as the Death Duties in fact are. At the begin- ning of 1919–20, the Death Duties have produced £691,000,000.
I have taken out the figures with regard to Income Tax, Super-tax and Death Duties, and perhaps the House will be interested to hear what they are. The total amount of income coming under assessment for Income Tax purposes in the year 1921–22 was £2,260,000,000. In 1927–28 it was £2,416,000,000. The total of the incomes liable to Super-tax in 1920–21 was £522,000,000, and in 1927–28, £531,000,000. In other words, the total amount of income assessable for Income Tax and Super-tax has, roughly, remained stationary during the past 10 years, but what do we find with regard to the Death Duties? The total amount of the capital value of estates brought under assessment in 1920–21 was £391,000,000; in the year 1928–29 it was £525,000,000. The progress has been continuous and increasing year by year. While Income Tax and Super-tax have remained about stationary, the amount of property assessable for Death Duties has increased in 10 years by 33⅓ per cent. What does that mean? It means that the income which produces Income Tax and Super-tax becomes taxable the moment it is earned or created, but as regards Death Duties, through the natural process of death, which takes place at unexpected times, we have been gradually and in increasing measure obtaining the results of the greatly increased fortunes which were made during the War. I have not seen the figures but I gather that in last year, 1929–30, the amount of property assessable for Death Duties must have been slightly less than the amount in previous years, because the product of Death Duties in 1929–30 was slightly less than it was in 1928–29.
My point is that we must have reached the peak, as regards the productivity of the capital which is assessable for Death Duties. The amount of such capital is bound to go down in the next 10 or 15 years. Unless we can replace in the hands of individual rich men the amount of money which has been paid away in Death Duties, we have passed the peak and the productivity of Death Duties is bound to be decreased. Accumulations of capital in the hands of smaller people may, and probably do increase the resources available for industry. There are
insurance companies and building societies and other forms of saving and those savings find their way into productive industry, but small accumulations of capital, in the hands of small people, are no good whatever for the purpose of revenue from Death Duties. Practically speaking, that revenue is only got out of the larger estates. This is essentially a tax on the big rich man and not on the smaller estates, and therefore replacement in some form or other in the hands of equally rich people, is necessary unless the productivity of Death Duties is to go down. Yet this is the time chosen by the Chancellor of the Exchequer for a very steep increase in the rate of Death Duties. The Colwyn Committee report says with reference to Death Duties:
We may say at once that in our opinion the rate of Estate Duty on large estates is, from the point of view of the effectiveness of that rate, already dangerously high.
That was written, I think, in 1927—at any rate before the present increase. As regards the question of avoidance, it has been said many times in the course of these Debates that you cannot get these great big chunks of direct taxation out of the taxpayer unless you carry with you his goodwill and unless he is going to pay willingly. The Colwyn Committee thought that the Death Duties were dangerously high two years ago. I suppose there are rich men—I do not think this is likely to be a general result but it is quite conceivable—who are without dependents, and who may say to themselves that if a quarter or a third or a half of their fortunes are to be taken away, they are going to spend the capital while they live. A man may say, "I am going to get what I can out of it." We only live once, and there comes a point in life at which the taxpayer may say, "This is not good enough, and I am going to adopt what methods I can to avoid this tax." Of course, there are other methods of avoidance, but that is the real danger. The Colwyn Committee, summing up their discussion of the Death Duties, say:
The physical effect of Estate Duty on saving appears to be severe and to be more damaging than that of the existing Income Tax. The same is true, although to a lesser degree of the physical effects of Estate Duty on enterprise.
It is chiefly from the larger estates that the new capital of the country can be obtained. The smaller property owner
has not the same opportunities of saving or the same margin out of which to save as the large owner of capital, and therefore it seems essential that the State, instead of trying to penalise almost out of existence the man of enterprise, initiative and ability, who has built up a large estate, should realise that it is out of the large estates that the bulk of the new capital of the country must come. The report recently issued by a committee of the Trade Union Congress appointed to consider the effect of taxation on prices and unemployment used these very significant words:
However desirable it may be to secure a fairer distribution of wealth it is fatal to national prosperity to eat up that capital which is necessary to finance present and future production.
That summed up in a very definite and remarkable way the effect of this tax. There is one point with which I should like the Chancellor of the Exchequer to deal in his reply. Some hon. Members have referred to the particular hardship of these duties in the case of agricultural property. Is it the intention to maintain the remissions given to agricultural policy in the Budget of 1925, and, if not, what is the proposal of the Government? Is it proposed that agricultural property should come exactly under these rates, or that there should be a proportionate increase of existing rates, or that it should remain as it is? I do not think that that point has been made clear, and, even at this early stage of our financial proceedings, we should have some enlightenment on it.
The other day the right hon. Gentleman, replying to criticisms on his Budget, said he could say a great deal about the social effects of the Death Duties, quite apart from the production of revenue. This would not be the occasion to go into the social effects of the duties in detail, but quite apart from all other considerations, the weight of these duties is having a very marked effect upon the whole structure of rural life. Capital which might go into the agricultural industry is being dissipated. Estates are being sold and ties, formed possibly centuries ago, in the agricultural districts are being broken. The hon. Member for Bridgeton (Mr. Maxton) said the other day that if the agricultural landowners were selling their estates, the working- class people of Glasgow were selling their houses. That may be so. I do not deny it, but at any rate it is clear that, even though the Death Duties have brought about this change in our agricultural districts, they have not, in so doing, helped the poorer people in the towns who are suffering to-day from unemployment and trade difficulties just as much as, if not more than they were, some years ago. Although these duties provide a remarkable revenue-producing weapon, it is a weapon which may break in the hands of a future Chancellor of the Exchequer.
The hon. Member who submitted this Amendment said quite frankly that he did so, not with any expectation that it would be accepted, but as a convenient peg on which to hang a general debate on the question of these Estate Duties. His own speech and subsequent speeches have certainly followed his expectation in that respect. We have had no reference whatever to the Amendment, but we have had very exhaustive arguments about the evil effects of the Death Duties, the breaking up of large estates, the dispersing of old families, the difficulties which private business firms experience on the death of the sole proprietor in raising what is necessary to meet the Death Duties. I shall not attempt to answer this general case about the effect of Death Duties. We are already half an hour beyond the time at which we expected to finish this Debate. There are however, one or two points which have been raised and questions which have been addressed to me, to which it is only courteous that I should reply.
One thing which struck me very much in listening to the denunciation of Estate Duties altogether was this fact: Estate Duties have been raised three times since the War, including, of course, the present proposals. Two of those rises have been proposed and carried by Chancellors of the Exchequer in a Tory Government. The right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) made, I believe, the biggest increase that has ever been made in Estate Duties at one time. Of course, he had the very good excuse that he was trying to put the country in as substantial a position financially as it was possible to do after the ravages of the War. The right hon. Gentleman the late Chancellor of the Exchequer (Mr. Churchill) raised the Estate Duty in 1925, when there was no such excuse. [An HON. MEMBER: "And reduced the Super-tax!"] That is exactly what I was going to say. He reduced the Super-tax and took the equivalent in Estate Duties. Why did he do that? Because he regarded Estate Duties as a much less pernicious form of taxation than Super-tax. I was in the House during the Debate, but I do not remember ever hearing a Tory Member get up and make such speeches as those to which I have been listening to-day. We heard nothing then about the ruin of the old families, the great injury to commercial concerns by increasing these Death Duties; and the fact that all these arguments have been reserved for an occasion when a Government of another party is making a comparatively modest addition to the Estate Duty makes one discount them to a very great extent.
This Amendment cannot be accepted; it is not expected that it should be. Let me say, however, that to accept it would cost £25,000,000 a year and would have the effect of reducing the rate of Estate Duty in some cases below the figure in the first year of the War and in some cases below the figure before the right hon. Member for West Birmingham made the increase. In regard to the question put to me by the right hon. Gentleman who spoke last about the position of agricultural land, if I do not propose in this Budget to alter the law in that respect it is purely as a matter of Parliamentary convenience. The Parliamentary programme is already tremendously overcrowded and one of my greatest concerns has been to keep the Finance Bill within manageable proportions. It has already extended to something like 50 Clauses and I have had to use the pruning knife very ruthlessly and take out a great many things that I would have liked to put in. It would be quite impossible to hope to get the Bill through in the time if these contentious matters were put in. That is the honest and simple reason why I am not dealing with the question of agricultural estates. It would have required another Resolution and altogether it might have meant two days of extra discussion on the Finance Bill.
Of course, but the right hon. Gentleman is aware that agricultural estates are divided for purposes of valuation for Estate Duty into two parts, the purely agricultural value and the value in excess of that value, i.e., the value for purposes other than agriculture. The increased rates will apply to what may be called the urban part of an agricultural estate.
I should like to express my gratification that the Chancellor of the Exchequer is leaving the duties on the agricultural parts of estates as they were left in 1925. I do not know whether the Chancellor is really desirous of accepting any expressions of gratitude, because he rather went out of his way to spoil the concession from that point of view by, as I understand him, saying that it was simply due to pressure on Parliamentary time that he did not propose this increase and not out of any regard to those engaged in agriculture. In fact I believe I have heard him on previous occasions state that he regarded the breaking up of the old landed system as a very excellent process and one which he thoroughly welcomed. The Chancellor said that the last increase of Estate Duty was in 1925, and that we of this party did not point out the capital loss and the detriment to the country in this enormous taxation. I do not know that the Chancellor is quite correct in that contention. I am quite certain that we who represent agricultural districts did press with all the vigour of which we were capable the very great detriment worked by these duties to all who were engaged in the industry of agriculture. It was because of these representations of the ruinous effect on agricultural districts of these heavy withdrawals of capital that a coneession was made by my right hon. Friend the Member for Epping (Mr. Churchill).
We have seen in the last 20 years the breaking up of big estates and the transference of farms to others than the original owners. Does the House really consider that the effects are beneficial all round? Many of those who have been compelled to buy their farms find them- selves to-day in the very greatest difficulties. It means that the capital which they would otherwise employ as farmers in stocking their farms, on implements and so on, has had to be tied up in the purchase of land; they have had to borrow money, they are in the hands of the bankers, and, in particular, in numbers of cases where these purchases were carried out under the inflated prices which ruled during and immediately after the War, the purchasers are in great financial difficulty to-day. Hundreds and thousands of them are only sighing for the day when they might return to the state of having a landlord. After all, the industry of agriculture for centuries has run on the basis of three parties, landlord, tenant and agricultural worker. The prime function of the landlord has been to supply capital, and I do not think that the greatest enemy of the landed system would deny that the landlords have supplied capital in the past at an extraordinarily cheap rate of interest for the purpose of farming.
These heavy extractions of Death Duties have prevented keeping the capital in the land and have caused the rate of interest on capital to be very much higher than it was in the old days. The State itself has had to come in, and we have had to have agricultural State credits and banks. That, I maintain, is due to this system of continual extraction of large sums of capital from the agricultural industry, from the individual who exists to supply it. If the scale proposed by my hon. and gallant Friend the Member for Oxford (Captain Bourne) were applied to agriculture and agricultural estates it would, I feel confident, assure farmers and agriculture generally that capital could be obtained for rural industries at a very much cheaper rate than it can be to-day. It would place behind the farmer a landlord who was prepared to see him through bad times, and that, of course, is very much needed at present. Therefore, I deplore the fact that the Chancellor of the Exchequer will not accept this Amendment, particularly on account of the disastrous effect on the agricultural industry.
The right hon. Gentleman who spoke just now from the Conservative benches referred to the fact that it was not known what the incidence of Death Duties was in certain foreign countries, and I hope that the Chancellor of the Exchequer will see his way to give the information for which I asked at Question Time to-day, as to the relative rates, not only of Death Duties, but of other taxes on income in the countries of certain of our foreign competitors. It is perfectly clear that, however desirable taxation by way of Death Duties is, you cannot go beyond a certain length, and, if other countries are a long way below our rate of taxation, it is taking a very great risk indeed to go on increasing the rate of taxation in this country. It seems to me that the Chancellor of the Exchequer is making use of the procedure of the Budget to redistribute to some extent the national wealth of this country, and I am bound to say that I am very glad that he is. It is because of his doing so that I gladly support this Motion to-day.
After all, there are hundreds of thousands of people in this country who, through no fault whatever of their own, have hardly a penny in the world; and there is a considerable number of people who, really through no merit of their own, have hundreds of thousands and millions of pounds. In the presence of a state of affairs like that, it seems to me to be essentially fair to take as large a proportion as possible from inherited wealth. A man who inherits a million, a quarter of a million, or a hundred thousand pounds, that being what is left after taxation by way of Death Duties, is a very lucky man indeed. It would be quite a different state of affairs if every man and woman in this country were living in comfort and ease; then there would be a very much stronger argument for not applying these heavy Death Duties; but in the existing situation of the country, when money has to be raised for social and other purposes, I think that the Chancellor of the Exchequer is perfectly entitled to make a levy of this kind.
While there are many dodges which people adopt, and which are going to be prevented by the present Budget, there are certain things that people can do to avoid the payment of Death Duties. There is nothing to prevent a man from handing over in a perfectly legitimate way a certain proportion of his estate to his children or other relatives. That effects a certain redistribution of wealth. It is largely done, and it probably will be still more largely done after this Budget. I cannot think that there is any real objection to it. It is one way of avoiding these very heavy duties. However unpleasant these taxes are to people who are going to be affected by them, and they are naturally very unpleasant—we should all greatly prefer to have our income untouched, and to have to pay no Death Duties at all when we die—nevertheless, seeing that money has to be raised, they are essentially just and reasonable, and for that reason I heartily support them.
I only propose to deal with one point which has been raised. One line which seems always to be taken by hon. Members opposite, and which was taken by the hon. Member for East Wolverhampton (Mr. Mander), who has just spoken from the Liberal benches, is that, whenever the Conservative party complain of an increase of taxation, we are thinking of our own pockets. Hon. Members opposite are taking the national point of view. The Chancellor of the Exchequer took it, and I noticed that the Financial Secretary to the Treasury had a rather malicious twinkle in his eye the other day when he took the same point of view. We feel that it ill befits hon. Members opposite to talk too much about the national point of view. They often refer to themselves as a class partly, meaning that they represent the working class. We should not agree absolutely to that; we think that we represent the working class just as much as they do. At the same time, they are undoubtedly a sectional party, and they represent the urban point of view.
That is quite natural. The large majority of them were brought up in towns and industrial districts, and they know all about them and take a great interest in them, but they know nothing, or very little, about the countryside, and they care less. They always subordinate the interests of the countryside to the interests of the town. I am an agricultural Member. I have lived in the country, and represent an agricultural constituency. We in the country—and this, I think, applies to the whole agricultural community—maintain that taxation such as this does not help anyone in agriculture, that it helps neither the landlord nor the farmer nor the labourer. There has been a great deal of talk about a letter which was written by Lord Lothian, and I noticed that when it was mentioned this evening many hon. Members opposite smiled. I do not know why they smiled—whether it was that they did not believe in what he said, or whether it was that they thought that it was of no importance; but the facts stated are absolutely correct, and any number of similar facts can be found in regard to other agricultural estates.
I would ask hon. Gentlemen opposite to think quite sincerely if there is anyone in the agricultural community who can benefit by this heavy increase of Death Duties, or by Death Duties as a whole, on a large scale, at all. The Chancellor of the Exchequer, speaking just now, said something about this being the third increase since the War, the other two having been made by Tory Chancellors. He seemed to think that that made it right, and he was very complimentary about it. I do not agree any more than I did before. I think that it was wrong of them, and of him too, and that he would have shown more originality, and, if I may say so with all due deference, more intelligence, if he had not followed their example in this respect.
To go back to the effects of the Death Duties on agricultural estates—and I am talking entirely about agriculture—there are, as has been said several times this evening, three branches of the agricultural industry. Firstly, there is the landlord, and I suppose no one will say that Death Duties are of any use to him. Then we come to the farmer. How can they help him? There are two sorts of farmer in the country—the man who owns his own farm, and the tenant farmer. I do not think that the increase of Death Duties hurts the man who is the owner of his farm. The increase of Super-tax, and of Income Tax, at any rate, does hurt him, and that very disastrously, but he is not affected by Death Duties. The tenant farmer, on the other hand, is disastrously affected.
After all, a farm does not run itself. In the case of an average farm, it is necessary to put a great deal of money into it every year. There is re-equipment to be done; there are new buildings to be built; there are old buildings to be repaired; an immense amount of expenditure has to be incurred. Lately we have heard a great deal about the disadvantages of arable farming, and the desirability of a good many farmers putting land down to grass. That, however, does not merely mean sowing grass seeds and buying cows. An enormous amount of extra expenditure has to be incurred. New steadings and cow-sheds have to be built, covered yards have to be built, and there is a great deal of very heavy capital expenditure. Of course, that would be done in the normal case by the landlord, but if a landlord, having inherited an estate, has had to pay 30, 40 or 50 per cent., according to the size of the estate, he cannot put in that extra capital which otherwise he would have put in.
There is another point. In ordinary bad times, when things have been bad for some time, the landlord will always put down the rent. I know that some hon. Gentlemen would not believe that, but it is honestly true, and it has been done a great deal during the last two or three years. The landlord stands in very much the same relation to the farmer as a reserve does to a company. It is a reservoir of wealth which is filled up during good times and, during bad times they can draw upon it. That reservoir has been empty for a very long time now, but latterly a certain number of landlords have been able to draw on other sources of wealth and fill it up in that way. Now the reservoir is getting emptier and emptier and there is nothing to draw upon. Farmers have nothing to gain by this taxation.
Of course, the labourers are wrapped up with the farmers. It is more obvious in this than in the larger industries with which hon. Members opposite are more closely acquainted, but if a farmer is not prosperous, if the industry is in a bad way, obviously the labourer's wages cannot be good. At present they are a miserable pittance for him to live on, but they are really quite as much as or more than can be paid in the present economic conditions. If there is to be an improvement, the industry must prosper, and it will not prosper if you take away the capital out of which improvements ought to be made. There is the question of agricultural housing in which hon. Members opposite are immensely interested. You cannot build an agricultural labourer's cottage in the part of the world where I live under £380 to £400 or, deducting the subsidy, £320. The landlord gets for that cottage 3s. a week, of which 2s. goes in rates and taxes. That leaves a shilling, or three-quarters per cent. on his outlay, out of which he has to pay for repairs and improvements. There is a dead loss on agricultural labourers' cottages.
You cannot expect any improvement in rural housing if you continue to bleed the industry as you are doing now. I do not think hon. Members opposite realise the position. They think we are pulling a very long face and crying crocodile tears when we talk about the condition of the agricultural districts, but the Chancellor of the Exchequer and the Financial Secretary ought to know, because they can get the information out of their Treasury officials. It is honestly true that what in fact you are doing is sweating the agricultural districts and grinding down the agricultural labourers in order to provide the urban workers with additional comforts and, for that reason, we oppose whole-heartedly this increase of taxation.
In supporting the Amendment, I should like to say that I have every sympathy with the Chancellor of the Exchequer in his difficult task of framing the national Budget, but I am convinced that there is no item amongst his proposals which deserves more adverse criticism than his proposal to increase the Death Duties, which is a direct charge upon the capital wealth of the country, at a time when, instead of decreasing our national wealth, we should be endeavouring to increase it in order to provide for the needs of our growing community and to provide the sinews for a virile and healthy industry upon which the welfare of our people depends. It is true that in extraordinary circumstances, and in a national emergency, the State may be justified in drawing upon its capital resources to meet the requirements of its current expenditure. Such a time unquestionably was the recent War, when the nation had no other course to pursue than to make great inroads into its capital wealth in order to prosecute to a successful conclusion the War in which it was engaged. But 12 years have elapsed since that time and, notwithstanding the difficult situation with which we are confronted to-day, a situation largely aggravated by the social and industrial disorders brought about by the Socialist party in 1926, the time has arrived to call a halt to drawing further upon our accumulated wealth in order to meet the requirements of our current expenditure.
Were the amount raised by the Death Duties, which is really a capital levy, to be entirely allocated to the redemption of debt, I should not object as strongly as I do to their continuance, but we are to-day the most heavily taxed nation in the world and, instead of reducing our taxation, as most other countries are doing, we pursue the futile policy of increasing it, which must inevitably lead to our being unable to compete successfully in the markets of the world against foreign competitors, and must end, like a rake's progress, in national bankruptcy and ruin. I welcome what the Chancellor of the Exchequer has said in regard to not adding to the Death Duties upon agricultural land. I should like to make one or two references to the incidence of the Death Duties upon the depressed agricultural industry.
The estate of a deceased person consisting of shares and bonds can usually be readily liquidated for the purpose of meeting the demands of the Exchequer, but an agricultural estate must perforce be broken up to meet exorbitant demands, frequently involving the breaking up of an economic unit, and invariably forcing the farmer, impoverished by the lack of a protective policy for his products, and none too well blessed financially at the best of time, to buy in his farm to protect himself and to maintain his home. I hold no particular brief for the landlord system, for until recently my whole experience was of the owner-occupier system, but under the landlord system the farmer not only has the great advantage of the help of a resident landlord free of charge, but gets his land on a rental of, let us say, 2 per cent., whereas if he is to assume the responsibility of ownership himself, the rental charge cannot be put on a financial basis of less than, let us say, 5 per cant., involving, as it does, a higher overhead cost of production or products on which, as the result of the country's lack of policy, he is unable to make a fair profit. In the case of an estate where there are a number of deaths in a short period of time, the owner has no other recourse than to sell his property, or pile on mortgage upon mortgage, which can but reduce his margin of capital wealth, and the country's margin of capital wealth as well for, judging by the number of properties for sale at bargain if not sacrifice prices today, the assets of the country have suffered enormous depreciation due to the country's declining wealth.
I know hon. Members opposite are prone to say that the landlord system has failed. If it has failed, it has failed because it has been driven out of existence by over taxation to the detriment of the countryside and of the whole of the agricultural industry, for there are few farmers who do not uphold the system which has proved a staunch friend to the industry in which they are engaged. The principle that the economically strong must carry the weak is one which meets with general approval to-day and it is one which I cordially support, but there is the inexorable law of diminishing returns to be remembered, and it must inevitably follow that if the economically productive are destroyed by over-taxation, the incidence of the Budget will eventually fall much more heavily than it does to-day upon the poorer members of society. From the returns and available statistics it is questionable whether increased direct taxation will bring the expected increased revenue to the Treasury, for already, under our present Government, the commercial and industrial credit of our country has been shaken and the bank rate, ever a sure barometer of industrial prosperity, has fallen with a corresponding increase in the unemployment figures of the land.
As a result of these overburdened Death Duties, there are few to day who can afford to die—in comfort. None of those who have devoted their lives to building up a fortune in order that their dependents may have a livelihood after their death can look forward to finding peace in the grave. I wonder whether the shades of those who will be called upon to pass on during this coming year will rise to haunt and point an indignant finger at the Chancellor of the Exchequer for having made miserable their last days upon earth? Truly the time has arrived when the taxpayers of this country can rise and exclaim, in the words of that French patriot of 20 years ago, "L'etat est l'ennemi." The late Marshal Foch, when lecturing to the cadets at St. Cyr many years ago, laid it down that the principles of war never changed; that it was only the conditions of war that altered. That dictum can well be applied to civil life to-day and to the building up of national wealth, for the only high road to the building of wealth, whether it be national or individual, is clearly marked by the old-fashioned signposts of enterprise, effort and thrift—thrift which to-day has been so largely driven out of existence by the over-taxation of the land.
I often think that we in this House and in the country as a whole devote far too much time and energy to the question of the distribution of wealth instead of to the creation of wealth, and that if we reversed our practice, a great many of the economic problems and complexities, in which we find ourselves engaged would rapidly sink into the limbo of forgotten things, and that the nation would once more rise more prosperous and happier than it is to-day. What we want in this country is not a cheap vote-catching policy, but a sound constructive economic policy to save the nation from the financial ruin with which it is confronted to-day. I will say to the right hon. Gentleman the Chancellor of the Exchequer, who, I regret, is not in his place at the present time, that until the Government of this country embarks upon a policy of retrenchment and economy, and is capable of envisaging a wider economic unit in co-operation with the other component parts of the British Empire, I can see no hope and no future for England or its people.
I do not intervene at this moment to discuss the general principles of Death Duties. The time has long gone past when it is possible to bring forward as a practical contribution to financial political thought the proposition that capital taxation should be used only for capital purposes. I entirely agree with the right hon. Gentleman who spoke a short time ago in what he said with regard to the general observations of this afternoon and evening. I should like to attempt a rather closer analysis of the danger points of the heavy duty upon wealth. There is practically no danger, until you get to the limit of taxation which is sheer confiscation, to the community as a whole when the wealth you are taxing is in the form of stocks and shares. It is unpleasant to have to give up one's wealth, or to watch wealth which might come to one being given up, but when you think of the welfare of the country no damage can be said to be done when wealth, in the form of stocks or shares, is sold by "A" and bought by "B" for the purpose of paying debts. It does not affect industry, at all events. That is the case where Death Duties, to whatever purpose they may be put by the State after they have been collected, are least harmful. But where you come to an estate which is not in the form of shares and not in a readily transferable, buyable and saleable form but in the form of business, it cannot be converted into cash without the sale of the business or some difficult complication with regard to the property. It is clear that Death Duties do affect industrial property.
There is even a worse case than that, and to it I wish to direct the attention of the House and of the Financial Secretary to the Treasury. I do not complain of the absence of the Chancellor of the Exchequer, whose human needs at this hour have to be satisfied as well as those of other persons, except those who are waiting to take part in the Debate. Death Duties come with severest force where you have an industry in which the wealth to be taxed is in the industry itself and where that industry is also depressed. That is why, in my judgment, Death Duties fall with such peculiar danger upon the community. I do not speak of hardship to the individual—I am not concerned with that—in the extraction of Death Duties from the land.
One is grateful for what the Chancellor said earlier in the Debate, namely, that he proposes to carry on the remissions to agricultural estates which were given in 1925, and I do not propose to suggest that agricultural land should be free from all Death Duties. I do not believe that under modern conditions these distinctions can be made, and the problem before any Government, if the evil effects of the extraction of Death Duties from agricultural land is to be minimised, is to find the method of extracting these Duties, which does a minimum instead of a maximum amount of harm. That method consists in the taking over of the land instead of converting the land into cash. Since 1909 there has been a provision whereby the Treasury can take over land in lieu of Duty, but that provision was brought to nought by a Treasury Minute that it would not operate except where the land was needed for public purposes.
That is so, and, of course, I bow to your Ruling, but may I say that throughout this Debate, to every word of which I have listened, the actual scale has not been the only topic under consideration? Indeed, the Chancellor of the Exchequer referred to the fact that the Debate had been upon a wider range. The observations which I propose to make can easily be brought within the terms of this Amendment; I trust that they can be, however, because, while the question of the effect of Death Duties upon agriculture and agricultural land has been widely touched upon to-day, the particular matter to which I seek to refer has not been dealt with. I do not expect to see agricultural land relieved from Death Duties, but I believe that it is possible to find a method of exacting Death Duties from agricultural land, which is less damaging. I well understand that the Treasury cannot be expected to become a landowner. Everyone who understands the functions of the Treasury and of the landowner—
I regret your Ruling, but I willingly bow to it. Let me, therefore, say that it is worth while the Chancellor's consideration whether the land cannot be put under a commission and taken over for the purpose of being handled in ways into which I cannot go, and whether that cannot be used as a method of minimising the disadvantages. The way in which the present exaction of Death Duties affects agricultural land has not been completely analysed. Where agricultural land is sold, it is sold either direct to the agricultural tenant or to a land speculator. The burden to the agricultural tenant of having to purchase has been dealt with by previous speakers, but what has not been dealt with is the other alternative, namely, where the land is sold to a land speculator, in which case those who seek to purchase the land, either tenants or otherwise, find themselves having to pay largely enhanced prices.
Hon. Members who have any acquaintance with the subject will know that this is the case, and that the activities of the land speculators are most inimical to agriculture, and are made much easier by the fact that the Death Duties tall so heavily upon land. Take the case where a sitting tenant purchases. It was said by the hon. Gentleman who preceded me and by others, that the evil that arose in that case was that the tenant had to use in the purchase of the land capital which ought to be put into the cultivation of his land. In Scotland that situation is very much aggravated, because we have no system of long-term agricultural credits. The position is slightly less anxious in England as a result of an Act which was recently passed, but in Scotland there is no method of assistance whereby the sitting tenant can get capital which is needed to purchase land upon easy, long credit terms. That is a big disadvantage, but even in England the existing system of long-term credit is by no means equal to filling the bill for the purchasing tenant. The fact that land can be taken over by the State, and is not taken over—
I hope that I am not going beyond the Rules of Order, but you will recollect that these topics have been touched on in the Debate by previous speakers. I do not think that I am going far wrong as long as I confine myself to an analysis of the results of the present scale of Death Duties. I am trying to point out that, as a result of the analysis of the effects upon agricultural land of the present scale of Death Duties, the absence of any proper credit system whereby the farmer who has to buy because of the present Death Duties—
On that point, is it not the case that the Finance Act, 1910, allowed land to be taken in lieu of duties, and that it was subsequently stated that a Treasury Minute forbade it to be taken? Would the hon. Member's proposals, therefore, imply legislation?
I do not desire to offend against the Rules of Order, but it is somewhat difficult to deal with the effect of Death Duties upon agriculture in an adequate way and have proper respect to the Rules of Order. Let me say in conclusion—[Interruption]—and the conclusion will be a long one, and is not likely to be shortened by interruptions of that sort. The general proposition that Death Duties are burdensome in proportion as the industries upon which they fall are depressed is a proposition which can scarcely be countered, and they are burdensome in proportion as the wealth upon which they fall has to be converted into cash before the duties can be paid, when the wealth upon which they fall, unlike stocks and shares, is not easily converted into cash. In that case they fall the heaviest. I do not advocate an expenditure of the money raised by Death Duties exclusively for capital purposes, but I think, and I put it to the Financial Secretary and to the House generally, that the real problem for this Government or any other Government is not merely a concern as to the amount raised by the Death Duties, but whether there should no be different methods of collection applied in the case of different industries, methods suitable for the circumstances of the particular industry; and whether relief, if it is to be given, ought not to be given in accordance with the principle that the industry from which the duty is being exacted is a prosperous or depressed industry. The question of the utilisation of the Death Duties solely for capital purposes becomes of comparative unimportance at a time when your national capital is increasing rapidly, and in the case of the individual whose capital resources are rapidly increasing I cannot imagine that he is doing himself any serious damage or controverting any economic law by using some of this increasing capital for purposes—
If I have transgressed the Rules of Order it is not because of any want of respect either to you, Mr. Deputy-Speaker, or to the Rules of Order. Perhaps, somewhat unwisely, I have tried to analyse the effect of these Death Duties on depressed industries and particularly the depressed industry of agriculture. It is a topic to which a return must be made, it cannot be left entirely as of no importance. The situation of agriculture is far too dangerous and difficult to allow any aspect of it to be left unanalysed and unconsidered. The existing scale of Death Duties puts a quite unnecessary burden upon agriculture. That point I have put before the House, and it is a point to which I shall have to return. I resume my seat with this conclusion, and it is one which must never be lost sight of, that the finance of this country, like every other weapon of State, must in our time and in our day be directed above all to try to readjust the balance between town and country. Unless that balance is readjusted, the state of this nation is far from safe.
|Division No. 274.]||AYES.||[9.3 p.m.|
|Adamson, Rt. Hon. W. (Fife, West)||Hall, G. H. (Merthyr Tydvil)||Naylor, T. E.|
|Adamson, W. M. (Staff., Cannock)||Hall, Capt. W. P. (Portsmouth, C.)||Newman, Sir R. H. S. D. L. (Exeter)|
|Addison, Rt. Hon. Dr. Christopher||Hamilton, Mary Agnes (Blackburn)||Oliver, George Harold (Ilkeston)|
|Aitchison, Rt. Hon. Cralgie M.||Hamilton, Sir R. (Orkney & Zetland)||Oliver, P. M. (Man., Blackley)|
|Alexander, Rt. Hon. A. V. (Hillsbro')||Harbord, A.||Owen, Major G. (Carnarvon)|
|Alpass, J. H.||Hardle, George D.||Owen, H. F. (Hereford)|
|Ammon, Charles George||Hartshorn, Rt. Hon. Vernon||Palin, John Henry|
|Arnott, John||Hastings, Dr. Somerville||Paling, Wilfrid|
|Aske, Sir Robert||Haycock, A. W.||Palmer, E. T.|
|Ayles, Walter||Hayday, Arthur||Perry, S. F.|
|Baker, John (Wolverhampton, Bilston)||Hayes, John Henry||Pethick-Lawrence, F. W.|
|Baldwin, Oliver (Dudley)||Henderson, Right Hon. A. (Burnley)||Phillips, Dr. Marion|
|Barnes, Alfred John||Henderson, Thomas (Glasgow)||Picton-Turbervill, Edith|
|Barr, James||Henderson, W. W. (Middx., Enfield)||Pole, Major D. G.|
|Batey, Joseph||Herriotts, J.||Potts, John S.|
|Bellamy, Albert||Hirst, G. H. (York W. R. Wentworth)||Price, M. P.|
|Benn, Rt. Hon. Wedgwood||Hoffman, P. C.||Pybus, Percy John|
|Bennett, Captain E. N. (Cardiff, Central)||Hopkin, Daniel||Quibell, D. J. K.|
|Benson, G.||Horrabin, J. F.||Ramsay, T. B. Wilson|
|Bentham, Dr. Ethel||Hudson, James H. (Huddersfield)||Raynes, W. R.|
|Bevan, Aneurin (Ebbw Vale)||Hunter, Dr. Joseph||Richardson, R. (Houghton-le-Spring)|
|Birkett, W. Norman||Jenkins, W. (Glamorgan, Neath)||Riley, Ben (Dewsbury)|
|Blindell, James||John, William (Rhondda, West)||Riley, F. F. (Stockton-on-Tees)|
|Bowerman, Rt. Hon. Charles W.||Johnston, Thomas||Ritson, J.|
|Broad, Francis Alfred||Jones, F. Llewellyn- (Flint)||Roberts, Rt. Hon. F. O. (W. Bromwich)|
|Brockway, A. Fenner||Jones, Henry Haydn (Merioneth)||Romeril, H. G.|
|Bromley, J.||Jones, J. J. (West Ham, Silvertown)||Rosbotham, D. S. T.|
|Brooke, W.||Jones, Morgan (Caerphilly)||Rowson, Guy|
|Brothers, M.||Jowett, Rt. Hon. F. W.||Russell, Richard John (Eddisbury)|
|Brown, C. W. E. (Notts, Mansfield)||Jowitt, Rt. Hon. Sir W. A.||Samuel, Rt. Hon. Sir H. (Darwen)|
|Brown, Rt. Hon. J. (South Ayrshire)||Kennedy, Thomas||Sanders, W. S.|
|Burgess, F. G.||Kinley, J.||Sandham, E.|
|Burgin, Dr. E. L.||Knight, Holford||Sawyer, G. F.|
|Buxton, C. R. (Yorks, W. R. Elland)||Lang, Gordon||Scrymgeour, E.|
|Caine, Derwent Hall-||Lansbury, Rt. Hon. George||Scurr, John|
|Cameron, A. G.||Lathan, G.||Shaw, Rt. Hon. Thomas (Preston)|
|Cape, Thomas||Law, A. (Rosendale)||Shepherd, Arthur Lewis|
|Carter, W. (St. Pancras, S. W.)||Lawrence, Susan||Sherwood, G. H.|
|Charleton, H. C.||Lawther, W. (Barnard Castle)||Shield, George William|
|Chater, Daniel||Leach, W.||Shiels, Dr. Drummond|
|Church, Major A. G.||Lee, Frank (Derby, N. E.)||Shillaker, J. F.|
|Clarke, J. S.||Lee, Jennie (Lanark, Northern)||Shinwell, E.|
|Cluse, W. S.||Lees, J.||Short, Alfred (Wednesbury)|
|Clynes, Rt. Hon. John R.||Lewis, T. (Southampton)||Simmons, C. J.|
|Cocks, Frederick Seymour||Lindley, Fred W.||Sinclair, Sir A. (Caithness)|
|Compton, Joseph||Lloyd, C. Ellis||Sinkinson, George|
|Cowan, D. M.||Logan, David Gilbert||Smith, Alfred (Sunderland)|
|Daggar, George||Longbottom, A. W.||Smith, Ben (Bermondsey, Rotherhithe)|
|Dallas, George||Longden, F.||Smith, Frank (Nuneaton)|
|Dalton, Hugh||Lovat-Fraser, J. A.||Smith, H. B. Lees- (Keighley)|
|Davies, Rhys John (Westhoughton)||Lunn, William||Smith, Rennie (Penistone)|
|Denman, Hon. R. D.||Macdonald, Gordon (Ince)||Smith, Tom (Pontefract)|
|Dickson, T.||MacDonald, Rt. Hon. J. R. (Seaham)||Snell, Harry|
|Dukes, C.||McEntee, V. L.||Snowden, Rt. Hon. Philip|
|Duncan, Charles||Macklnder, W.||Snowden, Thomas (Accrington)|
|Ede, James Chuter||McKinlay, A.||Sorensen, R.|
|Edge, Sir William||Maclean, Neil (Glasgow, Govan)||Stamford, Thomas W.|
|Edmunds, J. E.||Macpherson, Rt. Hon. James I.||Strachey, E. J. St. Loe|
|Edwards, E. (Morpeth)||Malone, C. L'Estrange (N'thampton)||Strauss, G. R.|
|Egan, W. H.||Mander, Geoffrey le M.||Sullivan, J.|
|Elmley, Viscount||Mansfield, W.||Taylor, W. B. (Norfolk, S. W.)|
|England, Colonel A.||March, S.||Thomas, Rt. Hon. J. H. (Derby)|
|Forgan, Dr. Robert||Markham, S. F.||Thurtle, Ernest|
|Freeman, Peter||Marley, J.||Tinker, John Joseph|
|Gardner, B. W. (West Ham, Upton)||Marshall, Fred||Tout, W. J.|
|Gardner, J. P. (Hammersmith, N.)||Mathers, George||Turner, B.|
|George, Rt. Hon. D. Lloyd (Car'vn)||Matters, L. W.||Vaughan, D. J.|
|George, Megan Lloyd (Anglesea)||Messer, Fred||Viant, S. P.|
|Gibbins, Joseph||Millar, J. D.||Walkden, A. G.|
|Gibson, H. M. (Lancs, Mossley)||Mills, J. E.||Walker, J.|
|Gill, T. H.||Milner, Major J.||Watkins, F. C.|
|Gillett, George M.||Montague, Frederick||Watson, W. M. (Dunfermline)|
|Gossling, A. G.||Morley, Ralph||Watts-Morgan, Lt-Col. D. (Rhondda)|
|Gould, F,||Morris, Rhys Hopkins||Wellock, Wilfred|
|Graham, D. M. (Lanark, Hamilton)||Morris-Jones, Dr. J. H. (Denbigh)||Welsh, James (Paisley)|
|Graham, Rt. Hon. Wm. (Edin., Cent.)||Morrison, Herbert (Hackney, South)||Welsh, James C. (Coatbridge)|
|Gray, Milner||Mort, D. L.||West, F. R.|
|Grenfell, D. R. (Glamorgan)||Moses, J. J. H.||Westwood, Joseph|
|Griffith, F. Kingsley (Middlesbro' W.)||Mosley, Lady C. (Stoke-on-Trent)||Whiteley, Wilfrid (Birm., Ladywood)|
|Griffiths, T. (Monmouth, Pontypool)||Muff, G.||Whiteley, William (Blaydon)|
|Grundy, Thomas W.||Muggeridge, H. T.||Wilkinson, Ellen C.|
|Hall, F. (York, W. R., Normanton)||Murnin, Hugh||Williams, David (Swansea, East)|
|Williams, T. (York, Don Valley)||Wilson, R. J. (Jarrow)||TELLERS FOR THE AYES.—|
|Wilson, C. H. (Sheffield, Attercliffe)||Wise, E. F.||Mr. Allen Parkinson and Mr.|
|Wilson, J. (Oldham)||Young, R. S. (Islington, North)||Charles Edwards.|
|Acland-Troyte, Lieut.-Colonel||Ganzonl, Sir John||Peake, Captain Osbert|
|Albery, Irving James||Gault, Lieut.-Col. Andrew Hamilton||Penny, Sir George|
|Allen, Sir J. Sandeman (Liverp'l., W.)||Gower, Sir Robert||Peto, Sir Basil E. (Devon, Barnstaple)|
|Baldwin, Rt. Hon. Stanley (Bewdley)||Grace, John||Power, Sir John Cecil|
|Balfour, George (Hampstead)||Graham, Fergus (Cumberland, N.)||Ramsbotham, H.|
|Balfour, Captain H. H. (I. of Thanet)||Grattan-Doyle, Sir N.||Rawson, Sir Cooper|
|Balniel, Lord||Greene, W. P. Crawford||Reid, David D. (County Down)|
|Beamish, Rear-Admiral T. P. H.||Grenfell, Edward C. (City of London)||Remer, John R.|
|Beaumont, M. W.||Gunston, Captain D. W.||Rentoul, Sir Gervals S.|
|Betterton, Sir Henry B.||Hanbury, C.||Roberts, Sir Samuel (Ecclesall)|
|Bevan, S. J. (Holborn)||Haslam, Henry C.||Ruggles-Brise, Lieut.-Colonel E. A.|
|Birchall, Major Sir John Dearman||Henderson, Capt. R. R.(Oxf'd, Henley)||Salmon, Major I.|
|Bourne, Captain Robert Croft||Herbert, Sir Dennis (Hertford)||Samuel, A. M. (Surrey, Farnham)|
|Bowyer, Captain Sir George E. W.||Hills, Major Rt. Hon. John Waller||Samuel, Samuel (W'dsworth, Putney)|
|Boyce, H. L.||Hope, Sir Harry (Forfar)||Sandeman, Sir N. Stewart|
|Brass, Captain Sir William||Howard-Bury, Colonel C. K.||Skelton, A. N.|
|Brown, Brig.-Gen. H. C. (Berks, Newb'y)||Hudson, Capt. A. U. M. (Hackney, N.)||Smith, Louis W. (Sheffield, Hallam)|
|Carver, Major W. H.||Hunter-Weston, Lt.-Gen, Sir Aylmer||Smith-Carington, Neville W.|
|Castle Stewart, Earl of||Hurd, Percy A.||Smithers, Waldron|
|Cautley, Sir Henry S.||Iveagh, Countess of||Somerville, D. G. (Willesden, East)|
|Cayzer, Sir C. (Chester, City)||Kindersley, Major G. M.||Southby, Commander A. R. J.|
|Chadwick, Sir Robert Burton||Knox, Sir Alfred||Stanley, Lord (Fylde)|
|Christle, J. A.||Lamb, Sir J. Q.||Stanley, Maj. Hon. O. (W'morland)|
|Coltox, Major William Philip||Lane Fox, Col. Rt. Hon. George R.||Steel-Maitland, Rt. Hon. Sir Arthur|
|Colman, N. C. D.||Law, Sir Alfred (Derby, High Peak)||Thomson, Sir F.|
|Colville, Major D. J.||Leighton, Major B. E. P.||Tinne, J. A.|
|Cranborne, Viscount||Llewellin, Major J. J.||Train, J,|
|Croft, Brigadier-General Sir H.||McConnell, Sir Joseph||Tryon, Rt. Hon. George Clement|
|Crookshank, Capt. H. C.||MacRobert, Rt. Hon. Alexander M.||Wallace, Capt. D. E. (Hornsey)|
|Croom-Johnson, R. P.||Maitland, A. (Kent, Faversham)||Ward, Lieut.-Col. Sir A. Lambert|
|Culverwell, C. T. (Bristol, West)||Meller, R. J.||Wells, Sydney R.|
|Davies, Dr. Vernon||Merriman, Sir F. Boyd||Williams, Charles (Devon, Torquay)|
|Davies, Maj. Geo. F. (Somerset, Yeovil)||Mitchell, Sir W. Lane (Streatham)||Windsor-Clive, Lieut.-Colonel George|
|Dugdale, Capt. T. L.||Morrison, W. S. (Glos., Cirencester)||Womersley, W. J.|
|Eden, Captain Anthony||Merrison-Bell, Sir Arthur Clive||Worthington-Evans, Rt. Hon. Sir L.|
|Edmondson, Major A. J.||Muirhead, A. J.|
|Elliot, Major Walter E.||Newton, Sir D. G. C. (Cambridge)||TELLERS FOR THE NOES.—|
|Erskine, Lord (Somerset, Weston-s.-M.)||Nicholson, Col. Rt. Hn. W. G.(Ptrsf'ld)||Major the Marquess of Titchfield|
|Fison, F. G. Clavering||Oman, Sir Charles William C.||and Major Sir George Hennessy.|
|Ford, Sir P. J.||O'Neill, Sir H.|
Thirteenth Resolution read a Second time.
I want to ask the Chancellor of the Exchequer a question upon this Resolution. It is difficult to deal with a Resolution of this sort unless the Chancellor is present. Let me show the House why. This is the very widest Resolution that I have ever seen upon the Order Paper of this House. Under the words of paragraph (a) if any hon. Member had, 20 years ago, sold a house, and that house had been bought by the Bank of England, then upon the death of that hon. Member his estate could be valued at either the assets of the Bank of England or a proportionate part of the assets of the Bank of England. That case is covered by this Resolution—[Interruption.] There is no doubt about it. To ask us to pass such a Resolution without an explanation is an outrage upon the House. We are not doing our duty, and the Chancellor of the Exchequer is not doing his duty. I have no sympathy for those who by unlawful means deprive the Exchequer of Estate Duty which ought to go to the Exchequer, but it is a totally different matter when a Resolution such as this is put upon the Order Paper. Subject to the conditions of the Finance Bill, it would render anyone who during his lifetime had sold any property, whether through the Stock Exchange or at the auction mart, and that property had been bought by any company, either in this country or anywhere in the world, subject to the risk of Death Duties out of all proportion to the estate which he actually possessed.
I do not want that man to escape the Death Duties, but I want him to be protected against an absurdly wide Clause which would land him into Death Duties
far beyond anything which he would be obliged to pay under the law as it stands. We are asked to pass a Resolution which has the effect I have stated, and I am quite sure that, whoever replies on behalf of the Government, cannot say that I have exaggerated the case in the least degree, because this Resolution would cover the case which I have mentioned. I cannot believe that the Government mean to do that. It is not enough to say that this Resolution is to be
subject to such exceptions and qualifications as Parliament may by any Act of the present Session relating to Finance determine.
It is not sufficient to say that we should wait to see what the Finance Act will give us, and we ought to have a statement at once as to the intentions of the Government, and why they are asking us to pass this Resolution. The Government ought to say quite definitely with regard to paragraph (a) what they are proposing to do. I will not deal now with paragraphs (b), (c) and (d). If we cannot have the information for which I have asked definitely stated, the Government should be able to tell us in informal language, and I hope the Chancellor of the Exchequer will be present to give the House this information. I have taken steps to have the Chancellor of the Exchequer informed that I was going to ask this question, and I am surprised that he is not present to answer it. The Government are not meeting the House in a proper way on this matter, and if they want these Resolutions passed quickly they should at least play their part.
There are certain features about this Resolution which it is quite impossible to pass without challenge. The right hon. Gentleman the Member for St. George's (Sir L. Worthington-Evans) has properly called attention to the fact that the word "property" has no reference to landed estates, and includes all estate. The right hon. Gentleman has also called attention to the fact that the word "company" appears to mean any corporation, British or foreign, imperial or otherwise. I think it is necessary that hon. Members should look a little more closely at what this Resolution is intended to cover, for it seems to strike not only at the future but at the past with-
out any limit of time. We are all agreed that sanctity of contract is a very desirable idea, and legislation of a retrospective character must always be locked at more closely than any other kind of legislation. Unless the Finance Bill when passed contains exceptional qualifications to render the wide language of this Resolution less illusory, there will be introduced an enormous amount of hazard into the ordinary affairs of the men and women of this country. Paragraph (a) provides that:
if a deceased person has in his lifetime directly or indirectly transferred property to a company and has in his lifetime received, directly or indirectly, benefits of any kind (other than interest or dividends) from that company,"—
That means that any person who at any distance of time has transferred property and has enjoyed benefits of any kind, and had it been limited to that I could understand it, but when it comes to the transfer of any property of any company by any body at any time it is difficult to understand words of that width. I do not understand the meaning of the words:
a sum representing the assets of that company at the date of his death, or a proper proportion of those assets.
A proportion is only one factor in the arithmetical sum unless you say what the proportion is to be. Is it to be proportionate to the period of time or the enjoyment or both? I quite appreciate that the moment for discussing this question in detail will be when the Finance Bill is before us, but I think it is only right that when a Resolution of this kind is put before the House we should enter a caveat each time it comes before us. It is solely with that object in view that I am making these observations.
I wish the Financial Secretary to understand that if a landowner were to transfer his property to a company and arrange that practically every shareholder should himself be a company, quite obviously there would be a state of things which would require to be checked. There is an increasing tendency to transfer property in order to avoid Death Duties, but it is a different thing to transfer landed estates to a one-man company to avoid Death Duties, and to interfere with business arrangements which were made 20 years ago. I do not propose to discuss paragraph (b) which is consequential, but I ask hon. Members to look at paragraphs (c) and (d). In paragraph (c) the value of the shares is to be calculated in some measure by valuing the total assets of the company. There may be no criticism of that proposal, but in paragraph (d) it is stated that the Estate Duty payable under the terms of this Resolution shall be a debt due to the Crown from the company, and that every director of that company shall be accountable to the Crown for the duty. I have no doubt that this is intentional, but the width of the responsibility placed upon those who innocently become members of a board of management of a company, in the event of somebody ever having transferred property to it, is really one which ought to be brought to their attention. In the case of a Resolution of this kind, capable of having such very wide meaning, unless there is some assurance that the Finance Bill will contain exceptions and qualifications which will make provision for genuine examples such as those which have been cited, there is a rather a serious matter involved which the House ought to take time to consider.
I should like for one moment to reinforce what the right hon. Member for St. George's (Sir L. Worthington-Evans) has said, and to carry the matter a little bit further than he did. I want to make my protest as I did on the 9th Resolution. Personally I do not think the House ought to be satisfied, as a general rule, with the mere statement from the Front Government Bench as to what their intentions are within the limits of these Resolutions. I am glad that the President of the Board of Trade is here, because I think he will sympathise very much with what is in my mind. This House is practically abdicating those privileges and powers, which it possesses by reason of Financial Resolutions, if it takes to passing a Financial Resolution of such ridiculous width, thereby making the safeguard of a Financial Resolution practically worthless. My hon. Friend who spoke last said he had not any particular quarrel with the last words of Paragraph (c). I want to quote them as being a very remarkable and extraordinary provision, giving positively ridiculous width and extent to powers which the Government are pro-
posing to take in the Resolution. It says that shares passing on the death of a person are to be valued
by reference to the principal value of the total assets of the company.
"Reference to the principal value" apparently means basing it upon the value, and I assume that "total assets of the company" means the total assets and not the excess of the company's assets over liabilities. I will give the right hon. Gentleman a case which I know of as an actual fact. It is the case of a man who, if he were to die to-morrow, would die possessed of an estate which, if it were valued as the law now stands, would be worth about £10,000. Half the value of that estate would be represented by a holding in one particular company, which I know of and particulars of which I could give to the right hon. Gentleman. The other £5,000 would be represented by odd assets of various kinds, including furniture, bank balance and trifling investments. The shares are worth £5,000, and not one penny more according to their intrinsic value on the strictest valuation, and that is above the value at which they are quoted on a free market in the Stock Exchange at the present moment. If the shares were valued by reference to the total assets of the company, instead of being worth £5,000 they would be worth £70,000. The Chancellor of the Exchequer, under this Resolution, is therefore taking power, where people hold shares in a particular type of company, to impose a liability for Death Duties on the estate of a person who dies, of far more than the total value of the whole of his estate.
I know the Chancellor of the Exchequer and the other Members of the Government too well to credit them with the intention to do anything so ridiculous as that, but what they are doing is this: They are making the most valued and valuable form of financial procedure in this House a ridiculous farce. I hope, and indeed feel quite sure, that the President of the Board of Trade will feel there is something in this, and that care ought to be taken by those who advise the Ministers in this matter to see that the House is not insulted by having submitted to it a Financial Resolution of such width and extent that the Government might have the power within the Resolution to do things which no House of Commons would ever allow them to do.
I think the right hon. Gentleman who raised this point from the Front Bench opposite, and the other two hon. Gentlemen, are perfectly entitled to put the point which they have put to me on this particular question, but I do not think the Government is to be blamed in bringing this Resolution forward in the particular way they have done. This Resolution is to cover cases of evasion. The House knows perfectly well the kind of case of evasion with which we have to deal. There have been cases in recent years in which persons with property—not necessarily landed property—have turned themselves into a company, and through various provisions which they have made they have enabled their estates very largely to escape the Death Duties to which they would otherwise be liable. This has gone on in various forms with which those who have studied the matter are fully acquainted. It is perfectly true—and nobody will deny—that the actual form that these Resolutions take is very much wider than the legislation which is going to be proposed, or ought to be proposed, in order to deal with these cases of evasion. The hon. Member who dealt with this point said that he thought it was an abuse of the Rules of the House and rendered of no effect the methods which this House adopts, of first carrying through these Financial Resolutions and then proceeding by way of a Bill. I do not take that view at all. The introduction of this Resolution, carrying it through first in Committee and then afterwards on Report, gives the House full warning that legislation of a certain kind is being promoted.
It indicates the general lines of the Resolution, and the House will become then fully cognisant of the fact that in order not to put oppressive restrictions—[Interruption.] I have listened with great attention to what the right hon. Gentleman opposite said, and I hope that when I am making the reply for which hon. Gentlemen have asked they will do me the courtesy of giving me their attention. I was trying to explain that so far from being of no effect, these Resolutions give the House due warning that these matters are going to be reviewed and dealt with by a Bill. This is undoubtedly a very complicated question. When it comes to the Finance Bill certain complicated Clauses will have to be inserted and very careful limitations made.
It would be very much overweighting the Financial Resolutions if they contained all the detailed complications which it is necessary to put into the Finance Bill. The House does not lose its control by what has been done. It will have an opportunity of seeing the Finance Bill very soon after these Resolutions have been carried. It will have an opportunity of weighing them up before the Second Reading of the Finance Bill. It will have an opportunity of discussing the Clauses on the Second Reading, and it will have an opportunity in Committee, on Report and on Third Reading. There will be four stages beyond that which we are taking at the present time, in which the details will be considered. I believe it is the practice of the House, and it is better, not to burden these Resolutions with the limitations which come afterwards in the Bill. It is true that these are wide provisions, but they will be more detailed in the Bill.
Let me explain briefly what it is that the proposals do. It is proposed to deal with the case of the man who hands over his own property to a company for the deliberate purpose of evading Death Duties. For that purpose it is necessary to go behind the technical forms of the transaction to the practical effect of the transaction, and if it be found, as it undoubtedly is found in a great many cases, that although technically and nominally he has disposed of his property to the company, in spite of that technical and nominal transaction he has exactly the same power over the income as he would have had it remained in his sole possession, that really is a case in which an attempt is being made to evade the law. It is in those cases that we propose to step in to vindicate the law and to obtain the Estate Duties which it is the intention of both sides of the House should be paid in such a case. The first para- graph deals with property in the sole possession of the person who makes the transaction.
Yes. It is where a man hands over his property to the company. The second case is where he proposes to do something of the same kind with his settled property, and the object is to prevent him from disposing of his settled property in a way similar to the first case, and avoiding payment of Estate Duties. With regard to the third case, it is not the intention to bring into dispute all companies whose shares are being freely sold in the open market, but the House is well aware of the fact that there are a large number of companies whose shares are not dealt with on the Stock Exchange but pass from one to two or three people in a market which is very closely confined and by sales, possibly in some cases designed for the express purpose, at an entirely fictitious value. Everyone who has had any dealings with companies which are companies of few people, know that that takes place. In that way when the property of one member of the company, shares in the company, come in at the death of that member, an entirely erroneous value is put on his holding in the company. It is proposed in paragraph (c) that in such case the revenue authorities shall not be bound by the share value which appears to be disclosed by what I will not say are bogus sales, but sales at fictitious values between the two or three people who are shareholders in the company.
Is it not the case already that in regard to shares where there is no market in the ordinary sense of the term, the Inland Revenue authorities can and do insist upon valuing the shares according to the Inland Revenue's own valuation of the assets owned by the company and, on the other hand, of its liabilities. In what respect, therefore, is it proposed to alter the law further at the present time?
We will look into the matter and I hope that later in this Debate either I or my right hon. Friend the President of the Board of Trade will say to what extent, if at all, the present position is inadequate to deal with the matter and why steps are necessary in such case for strengthening it by paragraph (c).
My hon. Friend called attention to the fact that the words "total assets" appear here and not "total net assets," and that the valuation might take place irrespective of the liabilities of the company.
I had not noticed that particular point, but I am sure that it will be dealt with. There is no intention to depart from a reasonable interpretation of what are the assets of the company.
I have no doubt that is the case. The hon. Member for Luton (Dr. Burgin) said that it is quite improper that a company should become liable, or the directors of the company, but if my hon. Friend will consider the matter he will see that in the cases to which I am referring, the cases of deliberate evasion, through handing over the whole of a man's property to a company, there is no other way of proceeding. Suppose I turned over the whole of my estate to a company, with one set of directors. By doing that, I practically leave no estate of my own and I leave my estate in the hands of the directors of the company. In such a case, unless we insert paragraph (d), how would it be possible for my executors to pay the duty out of the very trivial part of my estate that remained?
Someone must be made responsible. The individual who has made the transaction is dead and the remaining directors must be the people who, having the property in the company, are able to handle it. Of course I do not pretend to be able to give the House all the details which will appear in the Finance Bill. I think, however, that I have given to hon. Members a general outline of what the intention is and what it is proposed to do in the Finance Bill. These paragraphs of the Resolution cover our intention. I agree that they are a good deal wider than they ought to be, if it were intended to embody them in their existing form in the Bill. I still maintain, however, that it is less cumbersome to put them in this form and then, when it comes to the Finance Bill, to limit them to the cases that ought to be dealt with, than it would be to give in this Resolution the whole thing—to give the scope, the limitations, and the reservations and all that otherwise would be required. I hope that I shall find agreement in the House on this matter.
Will the Financial Secretary allow me to put this one question? Is it proposed that these suggestions in the new Finance Bill should deal with assignments to companies prior to the 14th April, 1930? It seems to me to be of the greatest possible consequence whether this is intended to be for the future only or to strike backwards.
Will the Financial Secretary deal also with this matter? He has given as his justification for levying this tax on companies the fact that the property has passed to them, but I would point out to him that the property does not pass for nothing. It passes in return for capital or shares, and are the companies therefore to be mulcted in this respect?
There are three points which I have to answer. In the first place as to special valuation of shares at the present time. I will answer that now. I think there have been occasions when it has been done, but in order that it may be regularised it is necessary to have this paragraph (c) in the Resolution. With regard to the point advanced from the Liberal benches, this does apply to cases where deliberate evasion has been attempted by action that has taken place in the past. I do not think, however, that this can possibly be termed retrospective. It would only be retrospective had it been proposed to go back and deal with the estates of people who had died in the past. This is not retrospective, because it applies to people who will die in the future, and with regard to those it is surely right to say that where it is shown that they have taken steps deliberately to evade the law, they should be brought within the terms proposed in this paragraph. It is perfectly possible and perfectly right to adopt this attitude just as it would be to alter the number of years in which the rule as to gifts inter vivos operates. It would apply to all those people who died after the particular Finance Act came into operation. That would not be retrospective legislation. Where people have so dealt with their property that when they come to die they will evade the Act, we must provide that they will not escape the tax.
It is intended solely to deal with evasion. Then the hon. Member for Down (Mr. Reid) raised a point which I cannot quite bear in my mind. Would the hon. Gentleman mind repeating his question?
My point was that the hon. Gentleman gave as his justification for levying this tax on companies the fact that the property had passed to them. But the property does not pass to companies for nothing. It passes in return for capital or shares, and therefore I would ask him if the companies are to be mulcted in this respect.
The hon. Member is thinking of legitimate transactions. The object of these proposals is to get at illegitimate transactions. The hon. Member evidently has had to deal with people who have been honest. In illegitimate transactions of this kind—
That is not the point at issue at present. The point is that, in illegitimate transactions, though the ownership of the property passes from the man to the company, yet nevertheless he does not receive shares in the ordinary sense; such shares as he receives are so constructed that he may get the benefit during his life, and yet there is no share passing at death. When the hon. Member asks who is going to judge, I would point out to him that in the Finance Bill there will be the precise terms and reservations, and if they are not satisfactory hon. Members will have three or four opportunities of dealing with them.
I cannot go further in the matter by setting out in detail exactly what is in the Finance Bill, but hon. Members will have plenty of time to see. I think I have dealt with this matter adequately, and I do suggest that the attitude we have taken up is the correct one. Hon. Members may think otherwise, but I have stated what I believe to be the case. I would like to finish as I began, by saying that we may differ on the precise terms that should be imposed in this matter; we may differ as to whether it is desirable that these Financial Resolutions should be drawn quite so widely, but I believe that there is very little difference of opinion in any section of the House that where deliberate evasion is practised—as it is undoubtedly practised in the cases to which I have referred, it ought to be stopped, not only in the interests of the State and the revenue, but in the interests of those taxpayers who are not dishonest and do not defraud the revenue. The House will have its own opportunity of saying whether the Government are attempting to go beyond what is necessary in order to stop evasion.
What I intended to convey was that these were practices which, if not at the time actually prohibited by the law, were generally recognised by right-thinking people to be thoroughly unsatisfactory and improper for citizens of this country.
I wish to make one specific point on this Resolution and the policy behind it. The hon. Gentleman has spoken of evasion. I have worked in the City since I was a boy, and if any practical technical knowledge which is at my disposal is useful to the hon. Gentleman to prevent evasion, it is there all the time. I am out to help any Government which will try to make people pay their just taxes. Having said that, I wish to call attention to the dreadful reply which we have had from the Financial Secretary. I do not wish to say anything harsh but he is a pure theorist in finance and his speech to-night is based solely on theory and not on practical knowledge. He talks about the width of these Resolutions. I am concerned as a citizen to try to help to keen up the country's credit and when the investors of this country see these Resolutions, they will not know of any technical meaning behind them. They will not know that the Resolutions have been drawn widely so as to be embodied in the Finance Bill; and I can assure the hon. Gentleman that, during the last week, there have been more real fears, more loss of confidence, owing to the behaviour of this Government than I have ever known in the City and I have been there since I was 19. It is this kind of amateur dealing with finance which is doing real harm and I want to make my humble protest against it.
The hon. Gentleman said that this Resolution was directed against illegitimate transactions. What is meant by "illegitimate transactions" in this connection I am not quite sure, but I assume that the hon. Gentleman means transactions which he hopes in future to stop by means of this Resolution, perfectly legitimate though they may be to-day. The construction of this Resolution is a little difficult to follow, but it may be that paragraphs (a) and (b) of the Resolution are directed at such transactions as have been indicated. When we come to paragraph (c) however, we find that it deals with a much wider class of transactions, including the acquisition of shares by any taxpayer in any public company in the country. Apart from the question of what may hereafter be illegitimate transactions, paragraph (c) clearly applies to a perfectly lawful transaction which is altogether outside the scope of paragraphs (a) and (b), namely, the acquisition of small parcels of shares in a public company. It provides that the value of those shares or interests shall be determined—not "may" be determined—not by the market price of the shares in the public company, the price at which they are changing hands every day, but "by reference to the principal value of the total assets of the company."
That is a monstrous condition, and it has no relation to the class of transaction which the Chancellor of the Exchequer desires to stop and with regard
to which I think he may rest assured that there is sympathy with him on both sides of the House. This paragraph goes outside that class of transactions; it inflicts an intolerable hardship, and induces a state of uncertainty in the mind of every holder of shares, whether of a large block or a modest block of shares, in any public company.
|Division No. 275,]||AYES.||[10.2 p.m.|
|Adamson, Rt. Hon. W. (Fife, West]||Forgan, Dr. Robert||Lee, Jennie (Lanark, Northern)|
|Adamson, W. M. (Staff., Cannock)||Freeman, Peter||Lees, J.|
|Addison, Rt. Hon. Dr. Christopher||Gardner, B. W. (West Ham, Upton)||Lewis, T. (Southampton)|
|Aitchison, Rt. Hon. Cralgie M.||George, Megan Lloyd (Anglesea)||Lindley, Fred W.|
|Alexander, Rt. Hon. A. V. (Hilltbro')||Gibbins, Joseph||Lloyd, C. Ellis|
|Alpass, J. H.||Gibson, H. M. (Lancs. Mossley)||Logan, David Gilbert|
|Ammon, Charles George||Gill, T. H.||Longbottom, A. W.|
|Arnott, John||Gillett, George M.||Longden, F.|
|Aske, Sir Robert||Gossling, A. G.||Lovat-Fraser, J. A.|
|Ayles, Walter||Gould, F.||Lunn, William|
|Baker, John (Wolverhampton, Bilston)||Graham, D. M. (Lanark, Hamilton)||Macdonald, Gordon (Ince)|
|Baldwin, Oliver (Dudley)||Graham, Rt. Hon. Wm. (Edin., Cent.)||MacDonald, Rt. Hon. J. R.(Seaham)|
|Barnes, Alfred John||Gray, Milner||Mackinder, W.|
|Barr, James||Greenwood, Rt. Hon. A. (Colne)||McKinlay, A.|
|Batey, Joseph||Grenfell, D. R. (Glamorgan)||Maclean, Neil (Glasgow, Govan)|
|Bellamy, Albert||Griffith, F. Kingsley (Middlesbro' W.)||Macpherson, Rt. Hon. James I.|
|Benn, Rt. Hon. Wedgwood||Griffiths, T. (Monmouth, Pontypool)||Malone, C. L'Estrange (N'thampton)|
|Bennett, Captain E. N.(Cardiff, Central)||Grundy, Thomas W.||Mander, Geoffrey le M.|
|Benson, G.||Hall, F. (York, W. R., Normanton)||Mansfield, W.|
|Bentham, Dr. Ethel||Hall, G. H. (Merthyr Tydvil)||Markham, S, F.|
|Bevan, Aneurin (Ebbw Vale)||Hall, Capt. W. P. (Portsmouth, C.)||Marley, J.|
|Birkett, W. Norman||Hamilton, Mary Agnes (Blackburn)||Marshall, Fred|
|Blindell, James||Hamilton, Sir R. (Orkney & Zetland)||Mathers, George|
|Bowerman, Rt. Hon. Charles W.||Harbord, A.||Matters, L. W.|
|Broad, Francis Alfred||Hardle, George D.||Messer, Fred|
|Brockway, A. Fenner||Hastings, Dr. Somerville||Miller, J. D.|
|Bromley, J.||Haycock, A. W.||Mills, J. E.|
|Brooke, W.||Hayday, Arthur||Milner, Major J.|
|Brothers, M.||Hayes, John Henry||Montague, Frederick|
|Brown, C. W. E. (Notts. Mansfield)||Henderson, Right Hon. A. (Burnley)||Morley, Ralph|
|Brown, Rt. Hon. J. (South Ayrshire)||Henderson, Arthur, Junr. (Cardiff, S.)||Morris, Rhys Hopkins|
|Burgin, Dr. E. L.||Henderson, Thomas (Glasgow)||Morris-Jones, Dr. J. H. (Denbigh)|
|Buxton, C. R. (Yorks. W. R. Elland)||Henderson, W. W. (Middx., Enfield)||Morrison, Herbert (Hackney, South)|
|Calne, Derwent Hall-||Herriotts, J.||Mort, D. L.|
|Cameron, A. G.||Hirst, G. H. (York, W. R., Wentworth)||Moses, J. J. H.|
|Carter, W. (St. Pancras, S. W.)||Hoffman, P. C.||Mosley, Lady C. (Stoke-on-Trent)|
|Charleton, H. C.||Hollins, A.||Muff, G.|
|Chater, Daniel||Hopkin, Daniel||Muggeridge, H. T.|
|Church, Major A. G.||Hudson, James H. (Huddersfield)||Murnin, Hugh|
|Clarke, J. S.||Hunter, Dr. Joseph||Naylor, T. E.|
|Cluse, W. S.||Isaacs, George||Newman, Sir R. H. S. D. L. (Exeter)|
|Clynes, Rt. Hon. John R.||Jenkins, W. (Glamorgan, Neath)||Oliver, George Harold (Ilkeston)|
|Cocks, Frederick Seymour||John, William (Rhondda, West)||Oliver, P. M. (Man., Blackley)|
|Compton, Joseph||Johnston, Thomas||Owen, Major G, (Carnarvon)|
|Cowan, D. M.||Jones, F. Liewellyn- (Flint)||Owen, H. F. (Hereford)|
|Daggar, George||Jones, Henry Haydn (Merioneth)||Palin, John Henry|
|Dallas, George||Jones, J. J. (West Ham, Silvertown)||Palmer, E. T,|
|Dalton, Hugh||Jones, Morgan (Caerphilly)||Parkinson, John Allen (Wigan)|
|Davies, Rhys John (Westhoughton)||Jowett, Rt. Hon. F. W.||Perry, S. F.|
|Denman, Hon. R. D.||Jowitt, Rt. Hon. Sir W. A.||Pethick-Lawrence, F. W.|
|Dickson, T.||Kennedy, Thomas||Phillips, Dr. Marion|
|Dudgeon, Major C. R.||Kinley, J.||Picton-Turbervill, Edith|
|Dukes, C.||Knight, Holford||Pole, Major D. G.|
|Duncan, Charles||Lang, Gordon||Potts, John S.|
|Ede, James Chuter||Lansbury, Rt. Hon. George||Price, M. P.|
|Edge, Sir William||Lathan, G.||Pybus, Percy John|
|Edmunds, J. E.||Lawrence, Susan||Quibell, D. J. K.|
|Edwards, C. (Monmouth, Bedwellty)||Lawson, John James||Ramsay, T. B. Wilson|
|Edwards, E. (Morpeth)||Lawther, W. (Barnard Castle)||Raynes, W. R.|
|Egan, W. H.||Leach, W.||Richardson, R. (Houghton-le-Spring)|
|Elmley, Viscount||Lee, Frank (Derby. N. E.)||Riley, Ben (Dewsbury)|
|Riley, F. F. (Stockton-on-Tees)||Smith, Ben (Bermondsey, Rotherhithe)||Viant, S. P.|
|Ritson, J.||Smith, Frank (Nuneaton)||Walkden, A. G.|
|Roberts, Rt. Hon. F. O. (W. Bromwich)||Smith, Rennie (Penistone)||Walker, J.|
|Romeril, H. G.||Smith, Tom (Pontetract)||Watkins, F. C.|
|Rosbotham, D, S. T.||Smith, W. R. (Norwich)||Watson, W. M. (Dunfermline)|
|Rowson, Guy||Snell, Harry||Watts-Morgan, Lt.-Col. D. (Rhondda)|
|Russell, Richard John (Eddisbury)||Snowden, Rt. Hon. Philip||Wellock, Wilfred|
|Salter, Dr. Alfred||Snowden, Thomas (Accrington)||Welsh, James (Palsley)|
|Samuel, Rt. Hon. Sir H. (Darwen)||Sorensen, R.||Welsh, James C. (Coatbridge)|
|Sanders, W. S.||Stamford, Thomas W.||Westwood, Joseph|
|Sandham, E.||Strachey, E. J. St. Loe||Whiteley, Wilfrid (Birm., Ladywood)|
|Scrymgeour, E.||Strauss, G. R.||Williams, David (Swansea, East)|
|Scurr, John||Sullivan, J.||Williams, T. (York, Don Valley)|
|Shepherd, Arthur Lewis||Sutton, J. E.||Wilson, C. H. (Sheffield, Attercliffe)|
|Shield, George William||Taylor, W. B. (Norfolk, S. W.)||Wilson, J. (Oldham)|
|Shiels, Dr. Drummond||Thomas, Rt. Hon. J. H. (Derby)||Wilson, R. J. (Jarrow)|
|Shinwell, E.||Thurtle, Ernest||Wise, E. F.|
|Short, Alfred (Wednesbury)||Tinker, John Joseph||Young, R. S. (Islington, North)|
|Simmons, C. J.||Toole, Joseph|
|Sinclair, Sir A. (Caithness)||Tout, W. J.||TELLERS FOR THE AYES.—|
|Sinklnson, George||Turner, B.||Mr. William Whiteley and Mr.|
|Smith, Alfred (Sunderland)||Vaughan, D. J.||Paling.|
|Acland-Troyte, Lieut-Colonel||Ganzonl, Sir John||Peto, Sir Basil E. (Devon, Barnstaple)|
|Albery, Irving James||Gault, Lieut.-Col. Andrew Hamilton||Power, Sir John Cecil|
|Allen, Sir J. Sandeman (Liverp'l., W.)||Gilmour, Lt.-Col. Rt. Hon. Sir John||Pownall, Sir Assheton|
|Atholl, Duchess of||Gower, Sir Robert||Ramsbotham, H.|
|Atkinson, C.||Graham, Fergus (Cumberland, N.)||Rawson, Sir Cooper|
|Balfour, George (Hampstead)||Grattan-Doyle, Sir N.||Reid, David D. (County Down)|
|Balfour, Captain H. H. (I. of Thanet)||Greene, W. P. Crawford||Remer, John R.|
|Beamish, Rear-Admiral T. P. H.||Grenfell, Edward C. (City of London)||Rentoul, Sir Gervals S.|
|Betterton, Sir Henry B.||Guinness, Rt. Hon. Walter E.||Roberts, Sir Samuel (Ecclesall)|
|Bevan, S. J. (Holborn)||Gunston, Captain D. W.||Ruggles-Brise, Lieut.-Colonel E. A.|
|Birchall, Major Sir John Dearman||Hamilton, Sir George (Ilford)||Salmon, Major I.|
|Bourne, Captain Robert Croft||Hanbury, C.||Samuel, A. M. (Surrey, Farnham)|
|Bowyer, Captain Sir George E. W.||Henderson, Capt. R. R. (Oxf'd, Henley)||Samuel, Samuel (W'dsworth, Putney)|
|Brass, Captain Sir William||Heneage, Lieut.-Colonel Arthur P.||Sandeman, Sir N. Stewart|
|Brown, Brig.-Gen. H. C. (Berks, Newb'y)||Hannessy, Major Sir G. R. J.||Skelton, A. N.|
|Carver, Major W. H.||Herbert, Sir Dennis (Hertford)||Smith, Louis W. (Shelfield Hallam)|
|Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)||Hills, Major Rt. Hon. John Waller||Smith-Carington, Neville W.|
|Chadwick, Sir Robert Burton||Howard-Bury, Colonel C. K.||Smithers, Waldron|
|Christie, J. A.||Hudson, Capt. A. U. M. (Hackney, N.)||Somerville, D. G. (Willesden, East)|
|Colfox, Major William Philip||Hunter-Weston, Lt.-Gen. Sir Aylmer||Southby, Commander A. R. J.|
|Colville, Major D. J.||Hurd, Percy A.||Stanley, Maj. Hon. O. (W'morland)|
|Cranborne, Viscount||Iveagh, Countess of||Steel-Maitland, Rt. Hon. Sir Arthur|
|Croft, Brigadier-General Sir H.||Kindersley, Major G. M.||Stuart, Hon. J. (Moray and Nairn)|
|Crookshank, Capt. H. C.||Knox, Sir Alfred||Tinne, J. A.|
|Croom-Johnson, R. P.||Lamb, Sir J. Q.||Titchfield, Major the Marquess of|
|Culverwell, C. T. (Bristol, West)||Law, Sir Alfred (Derby, High Peak)||Train, J.|
|Dalrymple-White, Lt.-Col. Sir Godfrey||Leighton, Major B. E. P.||Tryon, Rt. Hon. George Clement|
|Davies, Dr. Vernon||Liewellin, Major J. J.||Wallace, Capt. D. E. (Hornsey)|
|Davies, Maj. Geo. F.(Somerset, Yeovil)||McConnell, Sir Joseph||Ward, Lieut.-Col. Sir A. Lambert|
|Dlxey, A. C.||MacRobert, Rt. Hon. Alexander M.||Waterhouse, Captain Charles|
|Duckworth, G. A. V.||Maitland, A. (Kent, Faversham)||Wells, Sydney R.|
|Edmondson, Major A. J.||Meller, R. J.||Williams, Charles (Devon, Torquay)|
|Elliot, Major Walter E.||Merriman, Sir F. Boyd||Windsor-Clive, Lieut.-Colonel George|
|England, Colonel A.||Morrison, W. S. (Glos., Cirencester)||Womersley, W. J.|
|Erskine, Lord (Somerset, Weston-s. M.)||Morrison-Bell, Sir Arthur Clive||Worthington-Evans, Rt. Hon. Sir L.|
|Everard, W. Lindsay||Muirhead, A. J.|
|Fermoy, Lord||Newton, Sir D. G. C. (Cambridge)||TELLERS FOR THE NOES.—|
|Flson, F. G. Clavering||Oman, Sir Charles William C.||Sir Frederick Thomson and Sir|
|Ford, Sir P. J.||O'Neill, Sir H.||George Penny.|
|Galbraith, J. F. W.||Peaks, Captain Osbert|
Question put, and agreed to.
I want to raise a technical point on this Resolution. The House will remember that early in the day the question of the main Act of 1918 was not mentioned in the Resolution as amended by subsequent Acts, The question was raised whether that was in order, and you gave a Ruling on the matter. In this Resolution there has been put in a reference to the Finance Act of 1896 and the Acts amending it. I want to know why, if it is necessary to put the amending Acts in this Resolution, it was not necessary in the Resolution on insurance policies, and whether that will affect the provisions of the Finance Bill.
I should like to ask a question on this particular Resolution. [Interruption.] I have not taken any part in the Debate to-day, and I have the same right as every other Member to look after the interests of constituents and of the country as a whole and I intend to do so. I should like to ask what is the reason of this Resolution. I understand that it is dealing with objects of art. I wish to ask the Chancellor of the Exchequer precisely what he means by the definition which he uses in this Resolution. I realise that there are already certain technicalities by which the Government are able to prescribe objects of art in these cases. We have been told that these Resolutions are an attempt on behalf of the Government to explain what they are going to do in the future, and I think we might be told why it is necessary to alter the law on this matter, and how far it is desired that the law shall be altered—whether it is to be extended so that a larger proportion of objects of art of national interest will be included, or whether there is no intention of that kind.
The point is a very simple one. Hitherto works of art have been valued at at the time of death, but have not become chargeable to duty unless and until they were sold. Considerable disadvantage has resulted from that, especially to persons who inherited particular objects of art, because, however much secrecy was intended, it was disadvantageous, when there was any question of sale, that this valuation should have been made. It is now proposed that these articles shall not be valued at the time of death, but that, if and when they are sold, then for the first time they shall be valued; that Estate Duty shall be paid on them then; and that for purposes of aggregation they shall not be included in the estate at all, but that the rate of duty shall be the aggregate of the rest of the property with the objects of art left out. The other point is a minor one. I thought I had explained earlier in the day that it was sufficient to state the Act, which covered amending Acts, but sometimes, for the sake of convenience, these are stated also.