Clause 42. — (Selective Employment Tax.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 29 June 1966.

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Photo of Mr John Boyd-Carpenter Mr John Boyd-Carpenter , Kingston upon Thames 12:00, 29 June 1966

I agree with the Chancellor, and I hope that on this point my hon. Friend will allow me to be an abstainer.

My proposition is administratively practicable. Why, then, does the Chancellor want to levy this tax on the employment of pensioners? Broadly, he produced two arguments for his tax—the traditional one of a Chancellor, that he wants the money, and the argument, good or bad, that he wants to divert labour from services to factories.

I asked him a Question not long ago about the cost of exempting pensioners and he told me that it would be £10 million. That is a not insubstantial figure, even against the background of the tax, but I wonder whether he really thinks that £10 million levied on the employment of pensioners is a worthy or creditable impost.

I do not know whether the national economy is so poised on a knife edge that this £10 million is essential to it. If the Chancellor tells me that it is, I would say to him with respect that he can make it up either by a small reduction in the 7s. 6d. repayment for industrial employment, or by bringing into full payment of the tax some of those nationalised industries which the Bill proposes to exempt. Either of those alternatives seems a less bad way of getting £10 million than putting this impost on the employment of pensioners.

Is it realistic to suppose that people of this age, at least 65 if they are men and at least 60 if they are women, will be diverted in substantial numbers to factory employment? I am glad to say from my experience in the Ministry of Pensions and National Insurance that some are still at work in factories over that age, but it seems unlikely that many would be diverted into them from a different kind of work after pension age. I do not think there is a case for imposing this tax in respect of pensioned workers.

I hope the right hon. Gentleman will not use the argument which he used the other night, and which the Parliamentary Secretary to the Ministry of Labour used in answer to a Parliamentary Question the other day, that the tax falls on the employer and therefore it is all right. That seems a foolish argument, because it confuses the administrative point at which the tax is imposed with its effect. It is just as much sense to say that tobacco tax does not fall on consumers of tobacco because it is levied at the point of production. Its effect is what matters. As to the effect, we come to the very important point which follows the point made by the hon. Lady the Member for Hackney——