Amendment of Law.

Part of Orders of the Day — Ways and Means. – in the House of Commons on 22nd April 1936.

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Photo of Sir Archibald Sinclair Sir Archibald Sinclair , Caithness and Sutherland

Yes. Before 1931 it was £60 for the first child. Therefore, there is a benefit to the small Income Tax payers there; but the general statutory allowance for married persons is raised to only £180, as compared with £225 before the crisis of 1931. In his broadcast speech last night the Chancellor stated that out of 1,400,000 married Income Tax payers no fewer than 1,100,000 would benefit more by his reliefs than they would lose by the increase in the standard rate of the tax. I could not help wondering whether he had taken account of the fact that a great many of these married Income Tax payers own their own houses and are paying property tax on them, and that they will now have to pay at the rate of 4s. 9d. in the £. I therefore ask the Financial Secretary to be good enough to tell us whether the Chancellor's estimate took account of that circumstance, and if not whether he can give us a revised estimate which would take account of it. Another important feature of the Budget statement to which I will not refer at length to-day is the rise in the standard rate of Income Tax. I will only say that it is now raised to 4s. 9d., a level to which it has never risen except in time of war or immediately after the War or during the financial crisis.

In conclusion, I come to what is the chief feature of the Chancellor's statement, the provision for rearmament. Let me say at once that I welcome the fact, and will certainly support his policy in this respect, that this additional expenditure is, for the coming year at any rate, to be met by additional taxation. Whether the whole of this expenditure, whatever it may amount to, for we are still in ignorance of that, is necessary on political grounds, and whether we shall get full value for our money, are matters of opinion which I leave for future debate. But what is not a matter of opinion is that this expenditure will all be unremunerative, and therefore should be paid for out of the ordinary revenue and not by loan. I cannot, however, agree with the Chancellor that, with the exception of the period of the financial crisis, this generation has been neglectful of its responsibilities for defence. We have spent £1,000,000 on defence in the last 10 years. To call that unilateral disarmament is an abuse of the English language. In that time there have been no great battleships built, and I cannot help thinking that we have not received value for our defence expenditure, and that there is a very strong case for a searching inquiry into the expenditure of the defence departments.

The Chancellor, in his speeches on this point in this House and in the country, does not seem to emphasise sufficiently the importance of the financial factor in our scheme of national defence. We are spending now about one quarter of our income in rates and taxes. Before 1914, we were spending only one-ninth. I have seen it estimated, although I cannot claim to have checked the calculation, that even after the Napoleonic wars, let alone before them, we were raising by taxation only one-sixth of our national income. Before 1914 the revenue was buoyant, there was no external debt and the total internal debt was less than the sum which the Chancellor of the Exchequer is proposing to raise now in one year. Three years ago, the Chancellor said that taxation was, in some directions, reaching the point at which the law of diminishing returns would come into operation. Is that a condition in which we can support a great armament? Truth is many-sided, and the truth about defence—I think I heard the Chancellor mention something about the country. We on this side are just as keen on the defence of the country—