Clause 23. — (Provisions as to payment of interest on Government securities without deduction of Income Tax.)

Orders of the Day — FINANCE (No. 2) BILL. – in the House of Commons on 1st October 1931.

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

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Leicester West

This Clause raises a point that is different from but cognate to the point that was raised on Clause 22, and though it is different, I think it can be attacked and defended on the same lines as those which were used on the respective sides of the Committee on the former Clause. Therefore, I do not propose to say very much with regard to it, but we shall vote against it. I gathered from something that the Chancellor of the Exchequer said earlier that he was somewhat doubtful about this Clause and that he had only come down in favour of it after a good deal of hesitation. Our hesitation is apparently a little stronger than his, and we have come down in our minds against this Clause. The existing provision in regard to the 5 per cent. War Loan has proved a very inconvenient one. It postpones the payment of tax, and at the same time, in a certain number of cases—the Chancellor said there were only a few—it enables evasion to take place. For both these reasons, we are opposed to the Clause.

Photo of Colonel Albert Ward Colonel Albert Ward , Kingston upon Hull North West

Hon. and right hon. Members opposite will observe that this Clause is merely permissive. It does not say that the Treasury shall issue a conversion loan on those terms; it merely says that the Treasury may, if they think fit. There is not the least doubt that if we wish to bring a conversion of 5 per cent. War Loan to a successful issue, we must endeavour to encourage foreign money to come into it, and there is not the least doubt that foreign money on a long-term loan is a great advantage.

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Leicester West

May I point out that that is quite beside the mark, as we have already, in Clause 22, said that no foreigner shall pay tax at all on either of these loans? We are discussing Clause 23, which, in consequence of what we decided on Clause 22, does not apply to foreigners at all.

Photo of Colonel Albert Ward Colonel Albert Ward , Kingston upon Hull North West

As the hon. Gentleman says, this is cognate to Clause 22, but it is germane to the whole question. If Income Tax is to be deducted at the source, it will discourage the foreigner from investing his money. The ex-Financial Secretary to the Treasury is not a foreigner, and cannot know the foreigner's ideas on the subject. I know from my conversation with people who are foreigners, who have interests in this country, that the mere fact that Income Tax is to be deducted at the source will act as a serious deterrent and will prevent them investing their money. It is true that they will not be liable to Income Tax, but it means that it will be deducted from their dividends before they get them, and they will have to go through the cumbersome and laborious task of recovering it. That in itself will act as a deterrent and prevent foreigners investing their money in this proposed loan, and it will make it infinitely more difficult for an effectual conversion to be carried out.

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

The Committee divided: Ayes, 235; Noes, 126.

Division No. 511.]AYES.[9.7 p.m.
Acland-Troyte, Lieut-ColonelFison, F. G. ClaveringNicholson, O. (Westminster)
Ainsworth, Lieut.-Col. CharlesFoot, IsaacO'Connor, T. J.
Alexander, Sir Wm. (Glasgow, Cent'l)Ford, Sir P. J.Oliver, P. M. (Man., Blackley)
Allen, Sir J. Sandeman (Liverp'l., W.)Forestier-Walker, Sir L.Oman, Sir Charles William C.
Allen, Lt. Col. sir William (Armagh)Fremantle, Lieut.-Celonel Francis E.Ormsby-Gore, Rt. Hon. William
Aske, Sir RobertGalbraith, J. F. W.Owen, Major G. (Carnarvon)
Astor, Maj. Hn. John J.(Kent, Dover)Gauit, Lieut.-Col. A. HamiltonPeake, Capt. Osbert
Atholl, Duchess ofGeorge, Major G. Lloyd (Pembroke)Penny, Sir George
Atkinson, C.George, Megan Lloyd (Anglesea)Perkins, W. R. D.
Baldwin, Rt. Hon, Stanley (Bewdley)Gillett, George M.Peters, Dr. Sidney John
Balfour, Captain H. H. (I. of Thanet)Gilmour, Lt. Col. Rt. Hon. Sir JohnPower, Sir John Cecil
Balniel, LordGlassey, A. E.Pybus, Percy John
Beamish, Rear-Admiral T. P. H.Glyn, Major R. G. C.Ramsay, T. B. Wilson
Beaumont, M. W.Gower, Sir RobertRamsbotham, H.
Bellairs, Commander CarlyonGraham, Fergus (Cumberland, N.)Rathbone, Eleanor
Bennett, Sir E. N. (Cardiff, Central)Granville, E.Rawson, Sir Cooper
Berry, Sir GeorgeGrattan-Doyle, Sir N.Reid, David D. (County Down)
Betterton, Sir Henry B.Greene, W. P. CrawfordRemer, John R.
Birchall, Major sir John DearmanGrenfell, Edward C. (City of London)Rentoul, Sir Gervals S.
Blindell, JamesGriffith, F. Kingsley (Middlesbro' W.)Rhys, Hon. C. A. U.
Boothby, R. J. G.Gritten, W. G. HowardRichardson, Sir P. W. (Sur'y, Ch'ts'y)
Bowyer, Captain Sir George E. W.Gunston, Captain D. W.Roberts, Sir Samuel (Ecclesall)
Boyce, LeslieHamilton, Sir George (Ilford)Rodd, Rt. Hon. Sir James Rennell
Bracken, B.Hamilton, Sir R. (Orkney & Zetland)Rosbotham, D. S. T.
Briscoe, Richard GeorgeHanbury, C.Ross, Ronald D.
Broadbent, Colonel J.Hannon, Patrick Joseph HenryRuggles-Brise, Colonel E.
Brown, Brig. Gen. H. C. (Berks, Newb'y)Harris, Percy A.Samuel, A. M. (Surrey, Farnham)
Buchan, JohnHartington, Marquess ofSamuel, Rt. Hon. Sir H. (Darwen)
Buchan-Hepburn, P. G. T.Harvey, Major S. E. (Devon, Totnes)Samuel, Samuel (W'dsworth, Putney)
Cadogan, Major Hon, EdwardHaslam, Henry C.Sandeman, Sir N. Stewart
Caine, Hall-, DerwentHenderson, Capt, R. R. (Oxf'd, Henley)Savery, S. S.
Campbell, E. T.Heneage, Lieut.-Colonel Arthur P.Scott, James
Carver, Major W. H.Hennessy, Major Sir G. R. J.Shakespeare, Geoffrey H.
Cayzer, Sir C. (Chester, City)Hills, Major Rt. Hon. John WallerShepperson, Sir Ernest Whittome
Cayzer, Maj. Sir Herbt. R.(Prtsmth, S.)Hope, Sir Harry (Forfar)Simms, Major-General J.
Cazalet, Captain Victor AHoward-Bury, Colonel C. K.Simon, E. D. (Manch'ter, Witnington)
Chadwick, Capt. Sir Robert BurtonHunter, Dr. JosephSinclair, Rt. Hon. Sir A. (Caithness)
Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)Hunter-Weston, Lt.-Gen. Sir AylmerSkelton, A. N.
Chamberlain, Rt. Hon. N. (Edgbaston)Hurd, Percy A.Smith, Louis W. (Sheffield, Hallam)
Christie, J. A.Hurst, Sir Gerald B.Smith, R. W. (Aberd'n & Kinc'dlne, C.)
Clydesdale, Marquess ofHutchison, Maj.-Gen. Sir R.Smith-Carington, Neville W.
Cobb, Sir CyrilInskip, Sir ThomasSmithers, Waldron
Cockerill, Brig.-Generel Sir GeorgeIveagh, Countess ofSnowden, Rt. Hon. Philip
Cohen, Major J. BrunelJones, Sir G. W. H. (Stoke New'gton)Somerset, Thomas
Colfox, Major William PhilipJones, Rt. Hon. Lelf (Camborne)Somerville, A. A. (Windsor)
Colman, N. C. D.Kedward, R. M. (Kent, Ashford)Southby, Commander A. R. J.
Colville, Major D. J.Kindersley, Major G. M.Spender-Clay, Colonel H.
Conway, Sir W. MartinKnox, Sir AlfredStanley, Lord (Fylde)
Cooper, A. DuffLamb, Sir J. Q.Stanley, Hon. O. (Westmorland)
Courtauld, Major J. S.Lane Fox, Col. Rt. Hon. George R.Sueter, Rear-Admiral M. F.
Courthope, Colonel Sir G. L.Latham, H. P. (Scarboro' & Whitby)Taylor, Vice-Admiral E. A.
Cowan, D. M.Law, Sir Alfred (Derby, High Peak)Thomas, Major L, B. (King's Norton)
Cranborne, ViscountLeighton, Major B. E. P.Thompson, Luke
Crichton-Stuart, Lord C.Lewis, Oswald (Colchester)Thomson, Sir F.
Croft, Brigadier-General Sir H.Lleweilln, Major J. J.Thomson, Mitchell-, Rt. Hon. Sir W.
Crookshank, Capt, H. C.Locker-Lampson, Rt. Hon. GodfreyTitchfield, Major the Marquess of
Culverwell, C. T. (Bristol, West)Locker-Lampson, Com. O.(Handsw'th)Todd, Capt. A. J.
Cunliffe-Lister, Rt. Hon. Sir PhilipLong, Major Hon. EricTrain, J.
Dairymple-White, Lt.-Col. Sir GodfreyLovat-Fraser, J. A.Tryon, Rt. Hon. George Clement
Davidson, Rt. Hon. J. (Hertford)Lymington, ViscountVaughan-Morgan, Sir Kenyon
Davies, Dr. VernonMcConnell, Sir JosephWallace, Capt. D. E. (Hornsey)
Davies, E. C. (Montgomery)MacDonald, Rt. Hon. J. R. (Seaham)Ward, Lieut.-Col. Sir A. Lambert
Dawson, Sir PhilipMacdonald, Sir M. (Inverness)Warrender, Sir Victor
Denman, Hon. R. D.Macpherson, Rt. Hon. James I.Waterhouse, Captain Charles
Despencer-Robertson, Major J. A. F.Macquisten, F. A.Wells, Sydney R.
Dixon, Captain Rt Hon. HerbertMaitland, A. (Kent, Faversham)White, H. G.
Duckworth, G. A. V.Makins, Brigadier-General E.Wilson, G. H. A. (Cambridge U.)
Dudgeon, Major C. R.Margesson, Captain H. D.Windsor-Clive, Lieut.-Colonel George
Dugdale, Capt. T. L.Markham, S. F.Winterton, Rt. Hon. Earl
Eden, Captain AnthonyMerriman, Sir F. BoydWithers, Sir John James
Edge, Sir WilliamMillar, J. D.Wolmer, Rt. Hon. Viscount
Edmondson, Major A. J.Milne, Wardlaw-, J. S.Womersley, W. J.
Elliot, Major Walter E.Monsell, Eyres, Com. Rt. Hon. Sir B.Wood, Rt. Hon. Sir Kingsley
Erskine, Lord (Somerset, Weston-s.-M.)Moore, Lieut.-Colonel T. C. R. (Ayr)Wood, Major McKenzie (Banff)
Evans, Capt. Ernest (Welsh Univer.)Morrison, W. S. (Glos., Cirencester)Wright, Brig.-Gen. W. D. (Tavist'k)
Everard, W. LindsayMuirhead, A. J.Young, Rt. Hon. Sir Hilton
Falle, Sir Bertram G.Nall-Cain, A. R. N.
Ferguson, Sir JohnNewman, Sir R. H. S. D. L. (Exeter)TELLERS FOR THE AYES.
Flelden, E. B.Newton, Sir D. G. C. (Cambridge)Captain Austin Hudson and Viscount Elmley.
NOES.
Adamson. Rt. Hon. W. (Fife, West)Henderson, Right Hon. A. (Burnley)Potts, John S.
Adamson, W. M. (Staff., Cannock)Henderson, Arthur, junr. (Cardiff, S.)Price, M. P.
Alpass, J. H.Henderson, W. W. (Middx, Enfield)Quibell, D. J. K.
Arnott, JohnHerriotts, J.Richardson, R. (Houghton-le-Spring)
Attlee, Clement RichardHicks, Ernest GeorgeRitson, J.
Ayles, WalterHirst, W. (Bradford, South)Romeril, H. G.
Baker, John (Wolverhampton, Bilston)Hopkin, DanielSalter, Dr. Alfred
Barr, JamesHorrabin, J. F.Samuel, H. Waiter (Swansea, West)
Batey, JoaephHudson, James H. (Huddersfield)Sanders, W. S
Benson, G.Jenkins, Sir WilliamSawyer, G. F.
Bowen, J. W.Jones, Morgan (Caerphilly)Scrymgeour, E.
Bowerman, Rt. Hon. Charles W.Kelly, W. T.Shepherd, Arthur Lewis
Broad, Francis AlfredKennedy, Rt. Hon. ThomasShield, George William
Brown, C. W. E. (Notts. Mansfield)Kenworthy, Lt.-Com. Hon. Joseph M.Shillaker, J. F.
Brown, Rt. Hon. J. (South Ayrshire)Kinley, J.Simmons, C. J.
Buchanan, G.Kirkwood, D.Sitch, Charles H.
Burgess, F. G.Lawrence, SusanSmith, Frank (Nuneaton)
Buxton, C. R. (Yorks, W. R. Elland)Lawrie, Hugh Hartley (Stalybridge)Stamford, Thomas W.
Cameron, A. G.Lawson, John JamesStephen, Campbell
Cape, ThomasLeach, W.Strauss, G. R.
Chariston, H. C.Lee, Frank (Derby, N. E.)Sullivan, J.
Clarke, J. S.Longden, F.Thurtle, Ernest
Cluse, W. S.McElwee, A.Tillett, Ben
Cocks, Frederick SeymourMcEntee, V. L.Vaughan, David
Cove, William G.Maclean, Nell (Glasgow, Govan)Viant, S. P.
Cripps, Sir StaffordMcShane, John JamesWalker, J.
Daggar, GeorgeMalone, C. L'Estrange (N'thampton)Watkins, F. C.
Dalton, HughMarcus, M.Watson, W. M. (Dunfermline)
Dukes, C.Marley, J.Watts-Morgan, Lt.-Col. D. (Rhondda)
Duncan, CharlesMathers, GeorgeWellock, Wilfred
Dunnico, H.Messer, FredWelsh, James (Paisley)
Ede, James ChuterMiddleton, G.Whiteley, Wilfrid (Birm., Lady wood)
Egan, W. H.Milner, Major j.Whiteley, William (Blaydon)
Freeman, PeterMorgan, Dr. H. B.Wilkinson, Ellen C.
Gardner, B. W. (West Ham, Upton)Morley, RalphWilliams, E. J. (Ogmore)
Gossling, A. G.Morrison, Rt. Hon. H. (Hackney, S.)Wilson, C. H. (Sheffield, Attercliffe)
Graham, Rt. Hon. Wm. (Edin., Cent.)Mort, D. L.Wilson, J. (Oldham)
Grenfell, D. R. (Glamorgan)Noel Baker, P. J.Wilson, R. J. (Jarrow)
Groves, Thomas E.Noel-Buxton, Baroness (Norfolk, N.)Winterton, G. E. (Leicester, Loughb'gh)
Hall, Capt. W. G. (Portsmouth, C.)Oliver, George Harold (Ilkeston)Young, Sir R. (Lancaster, Newton)
Hardie, David (Rutherglen)Palin, John Henry.
Hardie, G. D. (Springburn)Pethick-Lawrence, F. W.TELLERS FOR THE NOES.
Haycock, A. W.Picton-Turbervill, EdithMr. Hayes and Mr. Charles Edwards.

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

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Leicester West

I should like to ask the Financial Secretary to the Treasury what is the exact position with regard to Sub-section (2) of this Clause?

Photo of Mr Walter Elliot Mr Walter Elliot , Glasgow Kelvingrove

The main purpose of this Clause is to provide for the modifications of the Sinking Fund including those which are necessary to deal with the Hoover Plan. As the hon. Gentleman knows, under the Hoover Plan we are to pay less money to the United States, and, correspondingly, we receive less money from Reparations and Allied Debts; and, unless this modification were made here, it would not be possible for us to "let up," if T may use that expression, that is to say, to modify the Debt charge in respect of our payments to the United States, and we should therefore be in the difficult position of receiving no money at all in the way of Reparations or Allied War Debts and still having to apply to Sinking Fund the amount saved on our payments to the United States. That, obviously, would be inadvisable, and therefore we have taken power to modify it in this Sub-section.

Photo of Mr Frederick Pethick-Lawrence Mr Frederick Pethick-Lawrence , Leicester West

Surely, that is not a complete answer to my question, which related to the whole of Sub-section (2)? The hon. and gallant Gentleman has only dealt with paragraph (a). I should like to know the position with regard to paragraph (b) also.

Photo of Mr Robert Richardson Mr Robert Richardson , Houghton-le-Spring

May I ask, Sir, whether you propose to call upon me to move the new Clause—[Reduction of club duty]—standing in my name.

The DEPUTY-CHAIRMAN:

I must point out to the hon. Member that the Clause standing in his name is out of order. There is no Ways and Means Resolution on which the Clause could be founded.

Photo of Mr Robert Richardson Mr Robert Richardson , Houghton-le-Spring

Would it be possible to have additional taxation without that being stated in the Preamble to this Bill?

The DEPUTY-CHAIRMAN:

No additional taxation can be levied which is not already covered by this Bill.