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 Roy Jenkins Mr Roy Jenkins , Birmingham Stechford 12:00 am, 27th April 1955

I was dealing solely with the last occasion. I was trying to compare the effect of a year in which we had an investment allowance but no reduction in the standard rate with a year in which we have a reduction in the standard rate but no investment allowance. Discussion at this stage of the Finance Bill—a discussion of the standard rate which we have in some form or another every year—necessarily turns on the attitude of the two sides of the Committee towards redistributive taxation generally. We on this side, although we do not believe in taxation for taxation's sake, believe that with the present redistribution of income at source which there is in this country a high degree of redistributive direct taxation is necessary if there is to be any degree of social justice.

I always find it very difficult to work out at all clearly what is the attitude on the other side of the Committee on this point. One frequently hears back benchers on the other side—the right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), and Viscount Chandos, when he was in this House, used to do so—talk as though the aim of the Conservative Party, provided that it could be done consistent with meeting our national bills, which, we hope, will be a constantly reducing total, was to get back nearly, at any rate, to pre-war rates of direct taxation.

I am never sure of the right hon. Gentleman's own attitude. Sometimes he talks—and has talked perhaps more this year than at any other time—as though to say that this reduction in the standard rate, which has been argued time and time again, means a very much higher proportion of reduction for people with big incomes than for people with small incomes, and no reduction at all for those with the smallest incomes.

It has never been clear whether his aim is to go on further and further, as and when it becomes possible, to try to get back to something like the 1938–39 level. I was still more confused on this point, although it was not a confusing speech, after listening to the very agreeable, fluent and able speech of the hon. Baronet the Economic Secretary to the Treasury when winding up the Second Reading debate on the Bill. He took a sentence from the speech that my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) made in the Budget debate, in which my right hon. Friend put a point rather similar to this and talked about a reactionary Budget going back to pre-war days.

The hon. Baronet replied to it with great force, saying that one could really not assume that this was so and that a number of people had been exempted from tax altogether and that the most wealthy section of the population was still paying, on a very large slice of its income, tax at 18s. 6d. in the£and, indeed, that people with£8,000 a year and upwards paid approximately three-quarters of their income to the Chancellor. He made the point with a great deal of pride, as if to say, "Here we have solid facts to put before the country." I should like to know from the Chancellor or from the hon. Baronet, what is the attitude of the Government on this matter. Is it, as he announced, or appeared to announce by the tone of his voice, with pride, redistributive, or is it, in his view, an unfortunate legacy from the past which he wants to get away from as quickly as he can?

It is very important when considering this point and what may be the future if, as we hope, will not be the case, the Chancellor has the opportunity of introducing more Budgets, to know in what direction he wishes to move—whether he thinks there is value in redistributive taxation or whether it is merely something imposed by the exigencies of the present situation which he would like to get away from as soon as and as far as he possibly can.