Clause 1. — ;(Charge of Income Tax for 1955–56 and Surtax Rates for 1954–55.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 27th April 1955.

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Photo of Mr Gilbert Mitchison Mr Gilbert Mitchison , Kettering 12:00 am, 27th April 1955

I know that that is greeted with loud approval from the benches opposite. It seems that hon. Members opposite prefer that those who are already enjoying the larger incomes and, therefore, paying the bigger taxes should receive the higher proportion of what is available by way of remission. In general, we on this side of the Committee totally dissent from that view. We fully recognise that Income Tax is, of course, a tax subject to reliefs in the lower groups and to that extent the gross inequity that it would otherwise cause is remedied.

In successive Governments we have always insisted on and emphasised those reliefs. When my party were in office we made it our first care to relieve at the bottom of the scale, and we did not so frame Budgets that these disproportionate amounts passed to this disproportionate extent partly to limited companies and partly to those who are paying the highest amounts in tax. The distribution of relief in this Budget is one which is grossly unfair in favour of the Surtax payer and grossly unfair against those who are right at the bottom of the Income Tax scale.

To do this at this time seems to be inviting trouble. We already have an economy in which there are some signs of inflation. Notwithstanding any pledges given about them at the last General Election, prices, broadly speaking, have continued to rise. To put it at the very lowest, there is still a considerable danger of that rise increasing, and we have just had a statement from the Government Front Bench, which is by no means the first of the statements made from there recently, about wage claims and threats of industrial action in consequence.

To choose this moment deliberately to grant relief in this form seems to me to be inviting trouble from that narrow point of view. I can go one stage further. Speaking for myself—and I think that many of my hon. and right hon. Friends will agree with me—I cannot regard as satisfactory any remission of tax which accepts the present distribution of wealth as fair and right. I have personally benefited from an unequal distribution of wealth and I have spent many years of my life, and propose to go on doing so, trying to remedy that unfairness as far as I can.

I believe that to confine any relief which he can give to a straight reduction of Income Tax is, to the extent to which the Chancellor has done it, politically and economically dangerous, and morally wrong at the present time. I say without hesitation that if this sum of money were available for distribution by me I would far rather have used it to remove altogether from the Income Tax liability some of the taxpayers at the bottom of the scale—by way of further reliefs, partly by reduced rates, partly by children's allowances, and partly by making much more adequate provision for the unemployment which has reared its ugly head again in Lancashire. To give the companies and corporate bodies the£42 million which the Chancellor proposes to do, and to give these large amounts to the highest range of taxpayers—the Surtax payers—seems to me, at this time, a disastrous and immoral mistake.

I know that a straight reduction has a classic simplicity, but I am sure that the right hon. Gentleman is already aware that both what is right and what is wrong may have a classic simplicity. In this case the simplicity of this Measure is calculated to hide the bad moral effects of what is being done. Therefore, while it is perfectly obvious that we are not proposing to divide upon this Clause, I would far rather have seen, if necessary, no remission in the standard rate, but the same amount of money going to those who are now at the bottom of the scale.

If there is any question about who needs it most, surely it is within the knowledge of right hon. and hon. Members opposite that when one speaks of the burden of taxation one must have regard not merely to the amount of taxes paid by an individual or company, but to the capacity of that person or company to carry it. At present, I believe that the burden weighs most heavily upon those at the bottom of the scale, at a time of rising prices without a sufficient corresponding rise in wages and earnings. Naturally, we are not going to vote against this reduction.