Amendment of the Law

Part of the debate – in the House of Commons at 12:00 am on 3rd May 1966.

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Photo of Mr Frederic Harris Mr Frederic Harris , Croydon North West 12:00 am, 3rd May 1966

It is my great pleasure and privilege to follow the hon. Member for Lewisham, North (Mr. Moyle) and to congratulate him on behalf of the Committee on the excellent maiden speech to which we have had the privilege of listening this evening, not only on the material of his speech, which we all found interesting, but on the great confidence which he displayed in delivering it. I must say that I was very envious even after 18 years in the House of Commons. He will understand when I say that his predecessor, Mr. Christopher Chataway, was held in deep affection by hon. Members, not only on this side, but on both sides of the House of Commons, and we shall miss him very much, indeed. However, we look forward with pleasure to hearing the new Member's future speeches.

Speaking so shortly after the Budget Statement, it would be wrong of me to attempt to comment in too much detail on what the Chancellor of the Exchequer said, but I share the views of my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) about the betting tax—like my hon. Friend, not so much about the gaming tax—for we must make sure that the betting tax is satisfactory and fully effective. I have many misgivings about it, but time will tell. I sincerely hope that the troubles which my hon. Friend mentioned will not come upon us, because the tax would then be a great disservice to the country.

I was concerned that the right hon. Gentleman should take Corporation Tax to the full limit of 40 per cent. Many of us suspected that he would and some prophesied that he might even go beyond that figure. It is not exactly an incentive to industry that he should have taken the figure to 40 per cent.

However, undoubtedly the matter which will attract our interest in the weeks ahead will be the Selective Employment Tax. This is a new and very heavy tax. As such, one can say that the Budget will be very tough when fully effective. Many difficulties will arise, some of which can be immediately foreseen and some of which were mentioned by my right hon. Friend the Leader of the Opposition. No doubt, as the debates on the Budget develop, we shall get the full details.

The new tax seems to be an extraordinary temptation to manufacturers at least to over-employ. It seems fantastic to give them a premium for the number of employees they decide to have. I think that the tax will mean tremendous duplication of administrative effort and expense, for people are to be made to pay the tax and then claim rebate. The cost of administration will be immense and undoubtedly the cost will be passed on in the price of services and so put up the cost of living. It will also be easy to increase the number of bureaucrats, which is surely a disturbing factor normally to be avoided.

Before making what I hope will be a short intervention in the debate, I should like to make a personal reference to a former colleague of mine, Sir Richard Thompson, who was Member for Croydon, South. He lost at the last election by a mere 81 votes. I should like briefly to place on record my appreciation of his unstinted hard work over a period of 15 years for Croydon, South and the town of Croydon. He will be a great loss to the House and I am pleased that he intends to soldier on in public life. Having said that, I should like on behalf of the House to extend a welcome to the new Member for Croydon, South (Mr. Winnick), who has come into the House even younger than I was in 1948 and who has got off to a flying start, having delivered his maiden speech only two days after coming into the House.

In making these few comments tonight about the Budget I do not intend to attempt to set myself up as an expert economist. Most of us agree that we suffer from enough of these, and certainly that we suffer from enough experts. Invariably even they do not agree with themselves. This must be recognised as a tough Budget and I am sure that it will be when it is fully studied, and all its implications realised. It certainly confirms what the Conservatives were saying would be the country's lot once the Socialists were returned to power. Certainly, so far as Croydon is concerned, it is a point which most candidates forgot to mention during the election.

We have reached the impossible stage when we face more and more taxation. Do the Chancellor and the Treasury think that this is the way to get the country out of the red? In my personal and business capacity I consider that we already suffer far too much from over-taxation. We have ever-increasing taxation and this adds not only to our personal burden and the burden of our people, but very clearly to prices and services. This Budget will hit very hard at prices and services and it is deliberately intended to do so.

It is a vicious circle. It discourages personal incentive; in many respects, the effort of the individual becomes quite pointless. To overcome the present troubles we should be encouraging our people to work harder, thus avoiding the fantastic hidden unemployment which we all know, regrettably, exists in all walks of life. The answer will not be found in taxing the people more and more. As a businessman I know the difficulty of recruiting staff, particularly when we have tough Budgets against us. Ultimately and sadly, one can hold one's staff or tempt more to join the business only by giving increases in wages and salaries. Consequently, the sole criterion cannot be the pegging of wages and salaries back to our deplorable low increase in national productivity in the last year or so. We just have to keep our staff, at whatever cost, and many companies can ill afford this. Eventually they will come up against difficulties in a bigger way and some will go out of business. I should like to ask the Treasury what is the answer to this?

Another point I wish to raise relates to the complexity of the present tax system, which, as we all know, was greatly increased by the Finance Bill of last year, and which, from what we have been told today, is going to be added to again in the next Finance Bill. People just do not know what tax they should be paying. They certainly do not know what allowances they are entitled to claim. The Treasury is obtaining additional taxation, most of it unfairly and often almost illegally. Professional advisers often cannot cope because they are overworked and often do not know the full implications of the taxation law. It is a very sad state of affairs.

If we are the modern country we claim to be we should go all out to simplify our taxation system. A strong directive should go out from the Chancellor to this effect. Even rate collection today is a constant worry to the public because, like tax, it is an ever increasing burden, full of complexities. People do not know what rate rebates they are entitled to claim, and the last legislation passed in this House regarding such matters had added to the problem.

As to the simplification of the tax system, I should like to give one concrete example which relates to Road Fund licences. In March I had an Adjournment debate in the House under the heading of "The scandal of unlicensed vehicles". This followed the increase, in the last Budget, of the Road Fund licence from £15 to £17 10s. per vehicle. As such taxes increase so do the number of tax dodgers. I received a considerable number of complaints from constituents who felt very bitter because a lot of people were dodging the payment for Road Fund licences. Today there is still an outrageous evasion. I do not intend to go over the details of the Adjournment debate, but after very full and personal investigation I came to the conclusion that—often through lack of staff or through the dreariness, or the length of proceedings in the present archaic system—of about 9 million car owners, about 4½per cent., or something like 400,000, do not initially pay Road Fund tax. It was rather amusing at that time to go to New Palace Yard and find large numbers of cars which did not have current Road Fund licences.