This Clause ought not to pass without comment. We have given Schedule A what I might call a full-dress State burial. This Clause seems to me to represent the disappearance of another little Schedule, perhaps to be buried in some paupers' sanctuary. But we must consider what is happening. To start with, the gap in the alphabet of Schedules will remain for years to provoke historians and economists into inquiries as to what on earth their forefathers were doing about Schedule B. When they come to search for what they were doing, how much will they really find? I am puzzled about what is to happen over Schedule B.
I can see the words and the effects of the Clause, but what does Schedule B cover now? It covers woodlands not on a commercial basis and not dealt with under Schedule D. I have no doubt that it covers a number of other curious things, but I do not know what they are. When the Schedule disappears, what exactly happens? What will be the cash effect one way or another of the removal of Schedule B or of the effect of the amendments to it? Does it survive? If so, to what extent and to what purpose? We have had two unqualified undertakings in about the same number of minutes on the last Clause. Let us see whether we can beat that here and get three.
I am sure that I shall be able to satisfy the hon. and learned Member completely. Schedule B will remain. It is not to be abolished. The Clause abolishes tax under that Schedule except, as the hon. and learned Member will see from the words of subsection (1), for commercial woodlands in cases where the occupier has not elected to be taxed under Schedule D. It also provides new machinery for determining annual value under Schedule D for commercial woodlands, and re-enacts in relation to land assessed under Schedule B the provision for taxation of income from easements which formerly applied to all land assessed under Schedule A.
As the hon. and learned Gentleman well knows, Schedule B is charged in respect of the occupation, as distinct from the ownership, of land in the United Kingdom other than dwellinghouses or land used for a trade. It was the Schedule under which farming profits used to be taxed but, since the year 1949–50, all farming profits have been brought under Schedule D. This means that tax under Schedule B is now chargeable only on occupiers of gardens of over an acre, parklands, sports grounds, sand and gravel pits not run on a commercial basis, non-commercial woodlands, commercial woodlands where the occupier has not elected to be taxed under Schedule D, and few other limited classes of property such as slag heaps and local authorities' sewage farms.
The charge is on an "assessable value" defined as one-third of the annual value, as determined for the purposes of Schedule A. There are now, I think, only about 30,000 items of property assessed under Schedule B, and the yield is not much over £100,000. So the cost of the abolition of Schedule B, except for commercial woodlands, is about £100,000.
Is it worth keeping the poor thing—an attenuated wraith derived from some ancient enactment or another? Do we want it any more? I have here the Royal Commission's final Report—published eight years ago—of which paragraph 926 states:
… we are not satisfied that (save in the case of commercial woodlands) there are any grounds of principle which would justify the continued imposition of the Schedule B charge.
There is another sentence:
In the circumstances, we recommend the abolition of Schedule B. Commercial woodlands would, of course. continue to be charged bat this might be effected under Schedule D…
Then there is reference to other matters, but what the Commission said is quite clear. And why not? I should have thought that this was a case where the Government had no doubt hesitated to kill but certainly need not have strived officiously to keep Schedule B alive, which seems to be exactly what they have been doing.
Whether or not commercial woodlands are assessed under Schedule B depends on a past election. I speak off the cuff, but I think that I am right in saying that in many of these cases, if the election has not been made it is now too late to make it. Whether that is so or not, the distinction between Schedule B assessment and Schedule D assessment of commercial woodlands was, I should have thought, in most cases nothing much worth preserving as that, and that the Government might have gone the whole hog and killed and buried the thing. Indeed, I thought for a moment that they had done so, but they apparently have not.
The oddest collection of things emerged. There was something about easements. I do not know how much money one gets out of an easement, but I suppose that it is much about the same as, in some cases, one gets out of a house under Schedule A. If the house is small enough and the easement is large enough, that might be all right, but where is the logic in doing away with Schedule A and continuing easement?
What do we tax when we tax an easement? What is the basis of assessment? When we assess an easement, what do we do with profit undrawn—is that also assessed under Schedule B? And what about these famous sewage farms? Is there not any other way of dealing with them? Are we to confuse the whole structure of the Income Tax Acts for the sake of a few easements and sewage farms, and commercial woodlands where the owner has not elected to be taxed under Schedule B?
Surely this matter should be considered again. I know that it takes time for any Government to act on the Report of any Royal Commission, but this was not a heavyweight one. What is the advantage of beginning the alphabet with B instead of C?
I do not think that this point is as simple as the hon. and learned Member for Kettering (Mr. Mitchison) has suggested. The option of taxing commercial woodlands under Schedule D or Schedule B will remain for the future. It can be exercised in the future in the same circumstances in which it could be exercised in the past. I realise that it is tempting to accede to the advice of Royal Commissions on occasion, but we must consider what the consequences of doing so would be. One consequence in this case would be that we should change the whole basis of assessment of commercial woodlands, and my right hon. Friend decided that, in the circumstances of this year, he did not wish to do so. That is the principal reason why Schedule B remains.
As the Committee will appreciate, there are many matters which have not been covered in the Bill, but we are making more changes this year than usual. If I were to give an explanation of every aspect of taxation which my right hon. Friend has decided not to change this year, I should take a very long time. My right hon. Friend, like his predecessors, considers the whole field of taxation every year. He did not think that, in all the circumstances, he should change the law relating to the taxation of woodlands
. The hon. and learned Member for Kettering referred to easements. What I had in mind was subsection (3), which re-enacts for Schedule B lands the provisions which were formerly contained in another section of the Income Tax Act, 1952, a Schedule A provision which is now being repealed, for taxation under Schedule D of profits from payments for easements over or rights to use the land in question in so far as they exceed the assessable value of land under Schedule B. It is convenient now to have the provision in its place in Schedule B.
This is only a drafting Amendment. We are doing what the hon. and learned Member for Kettering asked my hon. Friend the Economic Secretary to do a few minutes ago, namely, to try to make the Bill a little more intelligible, and it is for that reason only that we have included this provision.
This is most unsatisfactory. We are told that the Chancellor of the Exchequer has considered this technical and somewhat difficult problem small though it is, with great deliberation. When the Financial Secretary is asked to give the reasons which led the Chancellor to come to his decision, he says, in a manner reminiscent of Louis XIV, who said, "I am the state", that he will not do so. The result is that we are left with this weird little schedule, hanging on by the skin of its teeth, nearly dead and buried but not quite, operating on a variety of small things, including the remarkable one of commercial woodlands, not assessable under Schedule D.
Is it worth keeping this provision and disregarding the recommendation of the Royal Commission on a matter of this sort? Is it worth hanging on to this decaying peg something which used to hang on Schedule A, which is being abolished? It is obvious that this provision will have to go. I should not rate highly my powers of criticism of an Income Tax Act, but I would pay some attention to a Royal Commission's Report on a matter of this sort. I know that it takes about eight years to sink into the Government's head, but they have had eight years and I consider that long enough.
I do not know whether what I am about to say will commend itself to my right hon. and hon. Friends, but I should point out to the hon. and learned Member for Kettering (Mr. Mitchison) and to hon. Members opposite that the whole question of the taxation of commercial woodlands was considered in years gone by by Lord Dalton, who, after careful consideration and, I believe, discussion in the House, came to the conclusion that the existing option as between Schedules B and 13 should remain. While that may not be a precedent which will commend itself to my hon. Friends, I hope that it will commend itself to the hon. and learned Gentleman.
The Royal Commission reported in 1955. I do not carry all these dates in my head, but it would be interesting to know whether the Labour Chancellor of the Exchequer of those days had that Report before him. The abolition of Schedule A makes a difference and this seems to me to be the wrong moment to choose to keep Schedule B alive and to make this Amendment, hanging on to what used to be in Schedule A. It is not something which can be done by rejecting the Clause or something which can be done in five minutes, and, possibly, it will not be done this year, but I hope that it will be considered. It looks like a rather absurd bit of clinging on to relics and to venerating them.
May I put it this way. We considered both the Report of the Royal Commission and the reasons which commended themselves to Lord Dalton. I put them in that order with no disrespect to him. As to the complete abolition of Schedule B, the hon. and learned Gentleman will, I am sure, agree that the important aspect to consider is not so much whether the Income Tax Acts would look tidier without Schedule B, but what the effect of complete abolition would be on the taxation of certain profits. It was that to which we directed our attention.