I beg to move to leave out the Clause.

Although this Clause involves a comparatively small amount of money, it involves a very important question of principle. It goes to the very roots and fundamentals of our Income Tax practice. Under our existing system the income on which the tax is collected may come under one of two headings—income which is taxed that arises in one sense or another in the United Kingdom, or income which, although it arises outside the United Kingdom, is received within it. In other words, we only tax the income in cases where that income is created or enjoyed under the protection of British law. Now, for the first time, it is proposed to depart from that principle, and to tax income which neither arises nor is received in the United Kingdom—that is to say, income which neither in its creation nor in its enjoyment receives the protection of British law. It is proposed to do that in face of opposition from the self-governing Dominions, which do give protection to the creation and enjoyment of that income, and can legitimately claim that that income is more properly a subject for taxation by their Governments than it is a subject for taxation by ourselves. This Clause has had a somewhat curious history. It began almost without criticism or opposition when the right hon. Gentleman introduced it. On his Budget Statement and on the Report stage of the Resolution hardly any criticism was offered. The only voice raised against it was that of the hon. Member for Wandsworth (Mr. Samuel Samuel) in a maiden speech, to which the right hon. Gentleman paid a well-merited tribute. He congratulated the hon. Member on his courage in having stood out alone to criticise this Clause. Since we have known its terms and seen it in black-and-white, the criticism and the opposition have grown and developed.

In the first place, there has been criticism in the Press. In the second place, there has been a deputation which went to the Secretary of State for India, representing the views of those interested in the trade and commerce of India. In the next place, there have been representations from the self-governing Dominions, and, lastly, it is interesting to follow the course of the Debate on the Committee stage, because then, apart from the Treasury Bench, there was not a single voice raised in favour of the Clause. Three hon. Members opposite spoke from the Back Benches. One of them was the right hon. Gentleman the Member for the Spen Valley (Sir T. Whittaker), who is peculiarly well-fitted to speak on a financial question of this character because of his great knowledge and experience of these matters. He joined in the plea I myself urged, that this matter should be referred to the Royal Commission before it was dealt with. The hon. Member for Dumfriesshire (Mr. Molteno) said that the Clause was going to injure the international trade of Great Britain abroad, and complained that it was contrary to the principles of Free Trade. Lastly, there was the hon. Baronet the Member for Elgin and Nairn (Sir A. Williamson), whose speech I can only describe as condemning the Clause with the faintest possible praise. So that on the Committee stage the only speeches from the other side of the House which were made in favour of the Clause were those made by the Chancellor of the Exchequer and the Attorney-General. They, sitting on the Treasury Bench, could hardly have spoken otherwise.

The Clause in itself has certain attractions. I confess that, to my mind, at first blush, it had attractions, perhaps because what the right hon. Gentleman was endeavouring to do was to tax certain classes of income which now escape taxation, and which, if we could do it without injury in other directions, we might wish to tax, namely, the income of wealthy persons who can afford to leave it outside the jurisdiction of this country and reinvest it there without bringing it home. The points that have to be considered are, in the first place: Are you really and substantially going to hit the person at whom you are aiming and, in regard to that class of persons, to do justice as between one taxpayer and another; and, secondly, in order to be able to do it, are you not going to do an infinite amount of harm and mischief to Britsh companies trading in this country with foreign companies, and to British companies which do trade in foreign countries? Although in the first instance, I was attracted by the proposal, on looking into the matter I have come to the conclusion that you are going to create ten injustices for every injustice of which you are going to get rid, and you are going to create a whole host of fresh anomalies.

The wise and proper course with regard to this Clause would be to defer it for consideration to the Royal Commission which is about to be appointed. I will give one or two illustrations of how this Clause is going to operate. Under it you are going to let off partnerships and tax shares in companies. You are not going to tax a share in a partnership, but you are going to tax a share in a company. Assuming that there are two tea plantations in Ceylon or in India exactly identical in character, and producing exactly the same profit, say, £5,000 a year each, and one tea plantation is owned by a partnership which is controlled abroad. A, who is domiciled and resident in England, owns two-fifths of the partnership capital; he is entitled to £2,000 of the profits, and he reinvests it in India. He is not hit by this Clause. The next plantation, precisely similar in character, is owned by a company, and B, domiciled and resident in this country, owns two-fifths of the share capital of that company. He receives £2,000 in dividends, and reinvests in India, and is made liable to the double Income Tax of India and this country. What possible justification can there be for making the distinction in these two cases? You cannot put it on the ground that in the one case the profit is earned by the personal exertions of A, and in the other not by the personal exertions of B, because I assume A to be merely a sleeping partner. I will give a still stronger case to answer that, because if A, instead of owning two-fifths, owned the whole business, he would be liable under the existing law as controlling the business, however much he might leave it in the hands of a representative. The right hon. Gentleman is producing under this new Clause new anomalies which never existed in the Income Tax law before. It is absolutely indefensible on any principle of fair dealing and justice as between one taxpayer and another.

But that is not the worst of it. The right hon. Gentleman is going to do a most serious injury to British companies which carry on business in this country in competition with foreign companies, and while that will operate in any case, it will operate more strongly in the case of life insurance companies. There are foreign and Colonial life insurance companies in London, and there are British companies. By this Clause you are going to put a special handicap on British companies in that competition, because the foreign company will not be liable under this Clause and the British company will, and it is a matter of vital importance to insurance companies because the dividends on their investments are larger than the amount of their property. You are going to make British companies pay under this Clause, while you are going to let foreign companies off. Under that you are going to give such an advantage to foreign companies that it is bound to divert a great deal of the business which is now done by British companies to foreign companies. I raised that point in Committee, and there was no attempt at an answer from the Treasury Bench. They resorted to the usual device where a point is put which is incapable of answer, and they ignored it. Take the reverse case, which I did not bring to the right hon. Gentleman's attention in Committee. That is the case of a company domiciled and registered in Great Britain but doing business abroad. In those cases, under this Clause, you are going to do very serious injury indeed. As I understand, the present law is this: These companies are liable on their profits wherever they are earned, whether they are brought home or not—that is to say, a land company domiciled and managed from England is liable now on any profit which is earned in the Argentine or any part of the world, whether it brings it borne or does not. You are going to go further than this; you are going to tax them whether they make a profit or a loss, if they receive anything that you can call rent or income from shares or stock.

Take the case of a land company which makes a loss on the year and receives a certain amount of rent in the Argentine, and applies it in the Argentine in meeting losses or expenditure on its general business. You are going now, although it has made a loss and though that rent is paid in meeting losses, to tax it in this country. That is an entirely new proposal. It is not a proposal to which the House ever gave its sanction. The House never knew it was doing so, and if it had known what it was doing, it would never have consented to it. Take another case. An English company owns two hotels abroad, lets one at a rent and works the other itself, and applies the rent which it receives from the first in meeting its liabilities abroad, never bringing it home. In that case the right hon. Gentleman is going to tax it on the amount of that rent, although the company has never made any kind of profit. The worst case of all is the case of insurance companies, for the reason that the normal position of an insurance company is that its dividends and interest are greater than its profits. It is the normal position of several kinds of companies, but mainly of insurance companies, and in insurance companies a large number of very small people are interested. When we were discussing Clause 10, the hon. Member (Mr. Worthington Evans) gave us a very striking example of it, and since then I have had an interview with the director of an English insurance company which does a large amount of business abroad, and as he puts it, interest and dividends received abroad are six times the amount of profits earned abroad. So the right hon. Gentleman is going to make that company pay on the interest and dividends received abroad, although they are six times as great as the profits, which is virtually making them pay six times 1s. 3d. on the amount of their profit. In addition to that, they have to meet a local Income Tax. There is only one course for companies in that position, and that is to transfer their businesses to a foreign country. It is the only way in which they can continue to carry on business. It is not confined to the case of insurance companies. Take a bank which has branches abroad. Supposing in a particular year it makes a loss; you still make it liable on the interest and dividends of the investment which it has abroad, and which it uses to meet the current requirements of that business abroad, and never brings into this country. That was not the object of the House when the Clause was brought forward. The object was to hit rich men who escape Income Tax now by sending their investments abroad. The by-product of your Clause is an injury far greater than any good which you could hope to achieve.

4.0 P.M.

Now let me give the right hon. Gentleman another case. You have included in this the case of rent. To begin with, under our present Income Tax law, we do not tax rents as such at all. You tax profits or the annual value of land, but when you tax rent it means that in the case where a fine has been paid, and there is a small rent, the man escapes, but where no fine is paid he is made liable Surely that is absurd and utterly unjust. Again, these rents may be used for the purpose of developing an estate. I will take a case where a man has an estate in Canada, and receives a certain amount of rent in connection with it. I am not dealing with the case of gross or net rent, but I am assuming that he is using the rent for making capital improvements or making roads. Although he never brings it back into this country and uses it in developing his property in Canada, you are going to make him liable to Income Tax in this country when he may already be charged Income Tax in the country where he receives protection for his property. Surely, that is an utterly unjustifiable proposal. Moreover, you are taxing him on gross rent, but that arises on another Amendment. I will assume that it is net rent. I say it is unjust in the case of net rent to charge a man on rent which is used for the purpose of developing an estate, and which he never brings back to this country at all. In conclusion, I again venture to repeat my suggestion to the right hon. Gentleman that this would be a proper case to refer to the Royal Commission. Chancellors of the Exchequer for years have had present to their minds the fact that there is a certain amount of income abroad which is now escaping taxation and which they would like to make liable to it, but they have always seen the difficulties with which that path is strewn. The right hon. Gentleman at the very moment when we are going to appoint a Royal Commission to which that question is to be referred rushes in with this half-baked and crude Clause, which is going to do ten injustices for every case where it properly applies. To do that when you are about to appoint a Royal Commission is the high-water mark of political folly. The right hon. Gentleman says that if you pass this Clause now you will gain experience, and the Royal Commission will have something to go upon. The corpus vile of the experiment is the whole national trade of Great Britain, and the right hon. Gentleman is going to create an amount of dislocation, inconvenience and disturbance which is difficult for us in this House to estimate. There are many insurance companies which will have to make entirely new arrangements in view of this Clause, and it would be wiser before taking this step, when it is going to produce so little money, to have the whole question fully and carefully considered. If the right hon. Gentleman wishes to act up to the principle of his Government, to legislatate in haste and repeal at leisure, that is likely to cause the greatest possible inconvenience to many people doing important trade throughout the Empire and abroad, and I am confident that if hon. Members were only allowed to vote as they please they would vote in favour of letting this matter, first of all, be carefully sifted. As the right hon. Gentleman knows, they only support him out of party loyalty and devotion. I would ask the right hon. Gentleman himself to give effect to what he knows to be the real wishes and desires of his own supporters.

I beg to second the Amendment.

The hon. and learned Gentleman who moved the rejection of this Clause is really a very difficult person to please. This is not the first time he has made a speech about this Clause. The last time he made a speech about it he did not condemn it. On the contrary, on the last occasion, which was as recently as 13th July, he said that he sympathised with the objects of the Clause, and that he thought hon. Members in all quarters of the House must feel sympathy with the objects of the Clause. The last time he made a speech about it he felt very much concerned lest the machinery available for applying the Clause would not be strong enough to catch the people who ought to pay the tax, and that attitude and temper was so generally shared by hon. Members opposite that, though in the course of the Committee stage the Clause had been elaborately discussed from many points of view, it was felt that it should be part of the Bill, and nobody could be found to vote against this proposal. We pass from 13th July to the present date.

The hon. and learned Gentleman has not represented quite accurately what I said in my last speech. A great many of the arguments which I urged to-day I urged then.

Do I do the hon. and learned Member an injustice when I say that when he made his previous speech he gave us to understand that he was sympathetic with the objects of this Clause, and that he thought everybody else would be? Has the hon. and learned Gentleman changed his opinion or has he not?

I have not changed my opinion.

I thought when I heard his speech to-day that he was of a different opinion from that which he formerly held. When this Clause was previously discussed in Committee nobody could be found to vote against it, although there was a great deal of discussion in detail. The hon. Member for Colchester (Mr. Worthington Evans) and the hon. Member opposite (Mr. Cassel) made criticisms which I agree were valuable and important, and both, I think, were careful to explain that the general object of the Clause was one which they were not to be understood as condemning in toto. What is the object of the Clause? We have an Income Tax which calls upon many citizens to make contributions out of their incomes for various purposes—purposes which, so far as this Budget is concerned, nobody has disputed. Supposing a man has investments abroad which produce an annual revenue, and his resources are such that he cannot afford to roll that revenue up, and he has to bring it to this country to spend it—he is taxed. But the person who at present does not bring home the revenue is not taxed, and he is the citizen to whom the hon. Member, if he had his way, would show a special favour—the citizen who has such a revenue, but who, nevertheless, is so well provided with this world's goods that he does not need to spend the income he has got, but can invest it indefinitely, and he invests it abroad. That is the man the hon. Member for St. Pancras thinks ought not to be caught by this Clause.

I said the reverse.

I beg pardon. I do not wish to misrepresent the hon. and learned Gentleman. It seemed to me that he said that man ought not to be caught. If he does mean that that man should be taxed, what does he mean by moving the rejection of the Clause?

I say you are trying to catch that man by this Clause. I do not think you will do it, but you will do a great deal of harm to the trade of the country.

That might be a good reason for getting the hon. and learned Gentleman's valuable assistance in altering and improving the Clause. I fail to see how anybody in favour of putting Income Tax upon persons who at present escape because they get income from abroad should reject such a Clause, the object of which is to secure that they shall pay Income Tax. I remember that the hon. and learned Gentleman in his previous speech raised some question as to whether the machinery would be adequate to secure this new source of revenue from persons, who, as I then understood him, would be very proper persons to pay the tax. I pointed out that while no doubt the subject is a difficult one, you have available for the purpose of collecting the revenue under this new Clause the whole machinery of the Income Tax Acts—the system of declaration, the system of penalty, the system of exacting treble duty, the system of calling executors to account if their testator in the last years of his life is found to have concealed improperly his true income—and that just those same methods which in practice have been found to be effective for securing revenue under other classes of Income Tax are available to be used, and are to be applied, for the purpose of getting Income Tax from this new branch of the subject-matter. Therefore, so far as effectiveness goes, I should have thought that we had very good reason to say that this Clause is going to produce the result expected. The hon. and learned Gentleman says, "Here is a Clause with very little money in it." I remember the ex-Chancellor of the Exchequer, when he came to criticise the Clause, complaining that because the Chancellor of the Exchequer had so grossly underestimated, as he thought, the amount the Clause is going to produce—

I do not think I said there is very little money in it. I said it involved a small amount of money, but it involved a principle.

As the principle is a good one, and as the hon. and learned Gentleman says there is a little money involved, surely it must be a very good Clause. The latest estimates I have been provided with—they are, of course, only estimates, but they have been formed by very skilful persons in the Department—show that in this present year, when, of course, you only get a few months' revenue, it will produce £250,000. It is estimated that next year it will produce £470,000, and I think the hon. Member below the Gangway pointed out that, he anticipated a full year might produce £1,000,000. That is not a matter to be dismissed very lightly, unless the hon. Gentleman is opposed to the principle of the Clause, which, he tells us, he is not. If it be true that there are certain citizens in the country who at present escape Income Tax, though they are persons above all others who should pay it, to say that these persons ought to continue to escape a tax which in a full year will amount to £1,000,000, means that that amount has got to be found by other taxpayers who are already under the burden of the Income Tax, and who, it may be, cannot bear it so easily. The hon. and learned Gentleman says that here is a Clause which he thinks is likely to produce grave embarrassment in the Empire beyond the seas. He is quite right in thinking that this particular topic is one which those responsible for the Clause are anxious to consider most carefully. The Chancellor of the Exchequer has explained that the Clause in the way now proposed—there is an Amendment on the Paper, of which the Chancellor of the Exchequer has given notice—is expressed in the form which has been devised after consultation with representatives of the Dominions here in London. It is expressly so framed as to avoid those very objections which the hon. and learned Gentleman, after a process of mature reflection on the Clause, thinks will work for embarrassment. The Clause applies the general principle, and the burden of the tax is not to fall upon any individual who is not domiciled in the United Kingdom to begin with. That is to say, a great number of persons are to be found in the United Kingdom who have got an adress here, but who, nevertheless, are not domiciled here, although they may spend a great part of their life here, and they are not touched by this Clause at all. That, to begin with, is an important exception, and it is, I think, a very proper exception, which operates in order to relieve the kind of case which the hon. and learned Gentleman has in view. He referred to the Anglo-Indian case. That, again, is a very proper case to bring forward. It may be said that there are some of these persons who are domiciled in the United Kingdom. Domicile does not depend upon where you actually reside; it depends on other circumstances; and it may be that though a person is domiciled in the United Kingdom he is not ordinarily resident here, British subject though he is. The Anglo-Indian, whose case I think was mentioned by the hon. Member for Nottingham, who spends very little of his time in this country, but who is a British subject, and is usually resident in India, or it may be in any part of the world, is by the Clause, as we propose to apply it, exempt from this tax altogether. When you have excluded these men, the man who is not domiciled in the United Kingdom and the man who, though a British subject, is not ordinarily resident in the United Kingdom, you do provide for those very cases to which the hon. and learned Gentleman referred when he said that he thought that this Clause would produce feelings of soreness and resentment in the Dominions beyond the seas.

The Chancellor of the Exchequer, having entered into negotiations in London with the representatives of those areas, now has got this Clause in a form which does not produce that resentment, and in a form which ensures that no such charge can fairly be made against this Clause. Then the hon. and learned Gentleman goes on to complain because businesses are exempt. What would he have said if businesses were included? In a Finance Bill, and most of all in Income Tax Clauses, you always have the complaint either that it does not do enough or that it does too much. But the proposal here made is a proposal to tax securities, stocks, shares, and rents, and not a proposal to tax businesses. The right hon. Gentleman the Member for West Birmingham, an ex-Chancellor of the Exchequer himself, put that point yesterday, and if the hon. and learned Gentleman had been in the House he would have heard the right hon. Gentleman express great satisfaction that the new Clause does not include businesses. Are we to understand that the hon. and learned Member wishes that it did?

The right hon. Gentleman is not fairly representing me. What I stated is that you are making an absolutely illogical distinction between cases of partnership and companies.

But then what is it to be? On what basis does the hon. and learned Gentleman say that it is to be put? I agree that it happens quite often in income Tax laws—and anybody who is familiar with the subject knows many instances of it—that the actual line which you draw is a line which leaves on one side of it cases about which arguments might be made that they ought to be on the other side and vice versa. There may be a commission which is going to have the result of removing all those anomalies. If so, it will be a highly successful Commission. The truth is that in any Income Tax proposal, while you have to try to do what is fair, you do not found any valid criticism of the proposal by saying, "If you go as far as that why do you not go a little farther?" May I remind the hon. and learned Member that yesterday the right hon. Gentleman the Member for West Birmingham asked a question on this point, and it was pointed out, and I think he expressed great satisfaction with the answer, that our new Clause 5 is not addressed to businesses as such at all. Its primary object is to deal with the proceeds of securities, shares, stocks, or rents, and quite deliberately that is not extended to the case of the ordinary business. That is not to say that a business which is carried on abroad in all cases escapes Income Tax altogether, and if anything I said yesterday by accident produced that impression—I am sure it will not have produced it in the mind of the right hon. Gentleman, who knows the subject so well—I would like to take this opportunity of correcting it. As I understand businesses carried on abroad at present stand in this position that they are independent of Clause 5 altogether.

Suppose that an individual who carries on a business is resident in the United Kingdom, and carries on his business, it may be partly in the United Kingdom and partly abroad, as not infrequently happens, under the existing Income Tax law as administered by Government after Government, he has got under Schedule D his balance of profits and gains to bring the whole matter in; but supposing he is a main in whose case the business was exclusively carried on abroad, then in that case, so long as it is really carried on abroad, it is under the old law only the proceeds of that business, so far as they are remitted to this country, that come under the tax. On this point I may quote a well-known authority:—

"Where a person resident in the United Kingdom has profits from a trade carried on entirely elsewhere than in the United Kingdom, those profits are not assessable until they are received here by the person entitled to them."

That is undoubtedly how the matter stands now. What we propose in this Clause 5 does not touch such businesses at all. The hon. and learned Gentleman says, Suppose that the business was a company, and that its profits were expressed in the form of dividends on stock or interest on shares in that incorporated company, then, he says, if the individual who owned any of those stocks or shares was a person under Clause 5 he would be caught by it, though the owner of the business would not be caught by it at all. The criticism is just. What the hon. and learned Gentleman says is quite right, in so far as that shows that the line we draw is a line which to that extent has got to involve that anomaly. I admit that that happens, but unless the hon. and learned Gentleman is coming forward to say that that shows that we should not have such a Clause at all, which he does not say, or unless he is coming forward to say that that shows that we ought to extend the Clause to businesses, which he does not say, really his criticism leaves the Clause exactly where it was before. If the hon. and learned Gentleman is going to make that criticism, and then to say that you ought not to have such a Clause at all, and that you ought not to tax people who are drawing interest or dividends from securities abroad which they do not bring to this country, that would be another thing, but he does not say so. He says, "I approve of the principle." He did on the 13th of July and I understand he does so now.

If he was going to say, "I have shown you that there is a difference between the treatment of a business and of a company, and therefore businesses ought to be brought within the Clause," that would be an argument leading to some result, but he says that businesses ought not to come within the Clause, and therefore unless it be one wants to examine the Clause on the Report stage in order to make some quarrel with it—any quarrel will do—I fail entirely to see what is the importance of that particular criticism which the hon. and learned Gentleman has made. I am sorry if I seem to be unnecessarily vehement in my opposition to the hon. and learned Gentleman's criticism, but we all appreciate him when he makes a good point, and I suggest that the criticism which he is now putting forward cannot be a criticism which is going to be of any service to the Opposition, because this Clause, submitted as it has been to a great deal of discussion, is a Clause which was passed by common consent, as embracing cases which it was desirable to bring within the Income Tax law. The hon. and learned Gentleman made a reference to rents. I agree that that is rather a different case, and if he will be so good as to follow me for a moment, I would like to call attention to how the difficulty arises. I see an Amendment down on the Paper in the name of the hon. Member for Tewkesbury, and an Amendment in the name of the hon. and learned Member for Gloucester. I do not think that in that form we could contemplate accepting the Amendment, but in substance, what I would like to do is this: I am sorry to have to speak on rather technical things, but it is necessary, first, to put the following point on the Clause. The Clause deals with securities, stocks, shares and rents. From some points of view the case of rent is rather different from the case of securities, stocks, and shares. So far as securities, stocks and shares are concerned, I think that it will be found beyond question that on the Clause as it stands it is quite right in making a proper allowance in the event of those things not being sent to this country. But rent may be in a different position.

Suppose that a man has, say, house property in Canada, the rents which are paid in Canada by his tenants in respect of the occupation of that house property might be and might not be sent to this country. If they are sent to this country in the ordinary way, as I think was pointed out earlier in the Debate, they would be sent less the expenses of insurance, repairs, and things of that sort, and I think myself also in the ordinary way, they would be sent less any Income Tax which is payable on them. On the other hand, it is conceivable that they might not, and that they might be sent over here, as one might say, in gross, and that the owner might pay his Income Tax out of some other sources. The Chancellor of the Exchequer pointed out last night that it was not our intention at all to say that a man who had this property and kept it there should pay on a larger sum than the sum on which he would pay if the income was sent here, and we think that the words of Clause 5

"subject in the case of income not received in the United Kingdom, to the same deductions and allowances"

really cover that case, at any rate in most instances; but to make the thing doubly clear, we shall be prepared when the time comes to agree to a modification rather on the lines of the hon. Member for Tewkesbury, and I think it will be found best if I may just indicate it now. We should be prepared to bring in at some place, within a line or two of the passage which I have just quoted, words something to this effect: that the income which is not remitted to this country, though not remitted to this country, is to be taxed as though it had been received in the United Kingdom, subject to the same deductions and allowances as if it had been so received, and the deduction, where such deduction cannot be made under any other provisions of the Income Tax Acts, of any sum which shall be paid in respect of Income Tax in the place where the income shall have arisen. If we put that in it will make it doubly certain, because the last thing we would wish is that in the interpretation of this Clause—the interpretation of which is necessarily rather difficult—should be different from that which we indicate.

I indicate that because of the desirability of avoiding further misunderstanding. Having explained that, I turn to the main point, and I submit with confidence that the principle at the bottom of this Clause is a good one. The principle is to tax income of certain persons who enjoy income, and who at present escape Income Tax. If you are going to draw a distinction, they are a class of person who, as it seems to me, ought to be taxed more readily and more easily than some other people who cannot afford to roll up their incomes abroad in this way. I accept the criticism of the hon. and learned Member that the Clause might conceivably go further. Since he does not desire that it should go further, and since, on the other hand, he does not urge that the Clause in principle is a bad Clause, I would suggest that he might leave the thing as it stands in that regard. Thereby we shall catch the man who invests his money abroad and rolls up the interest of that money abroad. Whether the investor's money is in securities, in companies, in land, or house property we shall do that. At the same time we shall not in the least add to the burdens of the ordinary business man, whose case the right hon. Gentleman opposite so particularly raised last night. The addition was suggested of words which will make it quite clear that there will be no attempt to tax income which is not remitted to this country in a larger sum that the sum available to be taxed if it had been remitted to this country. After we have made these adjustments we submit to the House that we shall have made an addition to the Income Tax law which is thoroughly justified. I repeat that it is far better, if there is going to be an inquiry into the Income Tax law, that the inquiry should take place after this Clause has been put into practical operation than to simply leave it to the realm of theory, where it would not have the slightest opportunity of being tested practically in order to see whether the theoretical objections are well founded or not. I believe that the inquiry and the recommendations made would be far more effective if the Clause were passed and put into actual work, when it would be seen whether or not it operated on the whole fairly and justly.

We are all very glad that the right hon. Gentleman the Attorney-General has recovered his vigour and his volubility. He simply remained silent last night when we asked him for an answer on this point, and I am very glad indeed that after a night's consideration he is able to reconcile his view of the law with the view of the law laid down by the Chancellor of the Exchequer. We might have saved an hour's Debate last night had the right hon. Gentleman been in the same mood as he is to-day. We recognise the return of his vigour and volubility, but I can only say that I regret his references to the speech of my hon. and learned Friend (Mr. Cassel), for I believe if the right hon. Gentleman reads that speech made on the Second Heading of this Clause, and then reads his own speech, he will see that he has merely produced a caricature of the speech of my hon. and learned Friend. The hon. Member for West St. Pancras has been twitted—he has been more than twitted—he has been censured by the right hon. Gentleman because he stated on the Second Heading of this Clause that he was in sympathy with its general object. We have all been in sympathy with the general object of the Clause. [HON. MEMBERS: "Oh, oh!"] I have heard no dissenting voice on that matter. We all of us wish that the Treasury may be enabled to exact from any rich man who invests his money abroad, whether in a foreign country or in one of our Dominions, a proper amount of Income Tax on the income from his investments. Whoever that gentleman may be—where he is so rich that he can afford to leave the dividends on his money abroad and so evade his proper share of Income Tax, or probably prevents them from being added to the aggregate of his income so that they may come from one grade of Income Tax to a lower grade of Income Tax, we have no sympathy with that; nor have I heard any expression of sympathy with it. We agree that so far as Clause 5 operates to defeat the cleverness of that class of investor we are in favour of it. But because we are in favour of the general principle of the Clause, are we bound to say that we shall support that Clause whether it is amended or not amended, and though we think that the Clause is faulty in other prospects, and though we infinitely prefer that it should be dropped out of the Bill and sent to the Royal Commission, who are investigating the whole of these difficult problems? That is the attitude which was adopted by my hon. and learned Friend from the very beginning. He said, "I agree with the general object of the Clause, but I hope that when we discuss it many Amendments may be drafted to prevent that Clause from doing many acts of injustice." Those were pointed out by my hon. and learned Friend.

To-morrow night, supposing we do not vote against the Third Reading of the Budget it will be because we approve of things in it, because we approve of Clause 12 and of Clause 9. We find ourselves in this position, that we have to say in this House whether we agree in the main with something, or whether we think that we so disagree with it that we are bound to go into the Lobby against it. In the main we agree with the objects of the right hon. Gentleman in this Clause, and if there had never been any prospect of a Royal Commission I daresay we might not have taken up the attitude that we have taken up all through these Debates. The right hon. Gentleman said, "Do not let us send this Clause to Commission without having made some experiments which may be very useful to them." Many of us say that it is very hard that possibly on 10,000 victims of little acts of injustice, as possibly will be the result of this Clause, should be experimented upon for the good of the State. We think that if you are going to set up a Royal Commission, it would be much better to set it up before you do inflict many of these injustices which my hon. and learned Friend thinks undoubtedly will be inflicted by this Clause. As I have said, we have no sympathy with the investor who seeks to evade his proper share of the Income Tax by keeping dividends abroad and rolling them up, and does not have them sent over here. But I am not at all sure that we should agree as to another class of case which would be hard hit by this new Clause—the case of a man who puts his money into a small syndicate or company, and who is in the habit of keeping £2,000 or £5,000 in the business, and which sum never comes over here. But now he will have to declare the whole of the £5,000 here, whether it is from rent, securities, stocks or shares, and his income, very likely, will have to pay two Income Taxes, the Income Tax of the country of origin and the Income Tax of the country to which it is brought, and that will be aggregated, with other sources of income, and exposed to a higher rate of Super-tax than to which many of us think it ought to be exposed.

Hon. Members on the other side may ask why we should differentiate between the man who invests his money in business abroad in this way and the man who invests his money in business here; and the man who invests his money here and does not choose to spend the whole of his income, but returns a large part of that income into the business, would still have to declare the whole of his income in respect of Income Tax in this country. But I would point out that the whole of the benefit of the tax inures to his business in this country. There is a great difference between the man who derives £5,000 a year in Australia, Canada or Ceylon, and the man who derived £5,000 from his business in Yorkshire, Lancashire or London. In this country the tax will go to the benefit of the one who has his business in this country. Take National Insurance, part of the Income Tax goes to National Insurance claims, and possibly the man may have 400 hands employed in his business in Lancashire or Yorkshire. Let the same man of business go to Australia, Ceylon or Canada, he would have to pay the same Income Tax here, and that Income. Tax would not inure to his benefit. He might have 400 hands employed in Canada or Australia, and some of the Police Rate, the Poor Rate, or other purposes are matters on which the Income Tax there is spent. Therefore, I think there is a very great difference between the man who derives his income from properties and business situated abroad, and the man whose property and business are situated in this country. From the point of view of public policy I very much doubt whether it is wise to discourage men in this country, Englishmen, Scotchmen, Irishmen and Welshmen, from going abroad and putting their money into businesses and various industries or landed properties, and so on. I think it would be contrary to public policy to discourage them.

It may be said that if you put your money into business here and do not spend the whole of it, still you must return the whole of your rents, securities, and so on for Income Tax. After all, that has always been so. But this is a new departure altogether in taxation, and therefore I think it requires a very great deal of justification. I think the Attorney-General has had glimpses of certain acts of injustice that may be done under this particular Clause. I notice that he did not attempt to reply to the criticism of my hon. and learned Friend as to foreign companies. The learned Attorney-General did not attempt to meet that point at all, nor several other points. We have not been satisfied about this Clause from the very beginning in regard to the position of those who have to pay two sets of Income Tax—the Income Tax abroad and the Income Tax here. There again the discussion has been useful, because the Chancellor of the Exchequer, I think, is seriously disturbed in his mind as to whether it is not going to inflict a very great injustice indeed on those who will have to pay on the income which they derive abroad—who will have to pay two sets of Income Tax, one in Australia, or South Africa or New Zealand, and one here. Obviously that is contrary altogether, apart from its actual injustice to public policy. I have already heard in the last few days two people declare that in future people will not come over here to live in this country, but will go to Switzerland, France, or Italy, if they have to pay two sets of Income Tax when they return here. I am not quite sure that it is not good public policy to encourage all our citizens who leave this country for Australia or New Zealand or Ceylon to come over and live here as much as possible, either for the education of their children, or for other reasons. The reservations and conditions, which the right hon. Gentleman has made in regard to people domiciled here will meet many cases, but I believe there will still be under Clause 5 many instances where double Income Tax will be incurred by those who derive income in any of our Dominions abroad.

Will the right hon. Gentleman suggest one or two possible cases where double taxes will be paid?

I still think that it will be quite possible.

If the hon. Gentleman will suggest to me any case where a gentleman from the Colonies will be subjected to double taxes under this Clause, I am prepared to meet it.

I think a very great deal would depend on the Definition Clause. "Domicile" is a word on which lawyers quarrel very often, and on which there have been many cases in the Courts. All we say as regards this Clause is that, while we do support the right hon. Gentleman in trying his best by its means to catch those who seek to evade their proper share of the tax, we still think that in the Clause as it is devised there are a great many acts of injustice that will be done under it, both to individuals and companies, and the case of the companies has not been met or attempted to be met by the Attorney-General. Therefore while we have sympathy with the general object of the Clause, we have taken this line all along that the Clause is so uncertain in its operation, and so likely to bring about a great deal of injustice, that we thought it would be wise and more just if he did not put the Clause into the Bill this year, and if he referred the whole of this difficult matter to the Royal Commission which the Government are going to set up. That has been the whole of our case from the very beginning. Therefore, we have no right to be subjected to the taunt by the Attorney-General that we have not been thoroughly consistent in our general support of the Clause, while we have endeavoured to the best of our ability to show the weaknesses of the Clause, and to point out the injustices which might be perpetrated under it. Because we have taken up that position we are told, "Why do you not vote against the Clause. You are not consistent." We say we are thoroughly consistent in all our actions and criticisms as to this Clause, while at the same time we think that the general object of the Clause is good, and that is why we do not vote against it. And that is why, in all probability we shall not vote against the Third Reading of the Budget. It may contain many things to which we object, but with the Budget as a whole, we are not in disagreement, and just as we think that in the main this Clause is good, and ought to be supported, so we think in the main the Budget is good, and we have not voted against it, and we say that that is thoroughly consistent with our attitude.

The right hon. and learned Gentleman, the Attorney-General, quoted, very unfairly I think, remarks of the hon. Member for West St. Pancras (Mr. Cassel) as to the attitude he had taken up with regard to this Clause. As I was included to some extent, I propose to claim that my attitude in this matter has been consistent. I say now that I sympathise with what the Chancellor said was the object of the Clause, but I say that the object which he expressed in his Budget Speech is not carried out. This is what he said the object was, dealing with this Clause:—

"I come now to another proposal from which I hope to get some revenue, and that is income that escapes taxation now owing to arrangements purposely made by men who are rich enough to leave their incomes abroad for reinvestment. In most cases those arrangements are made deliberately in order to escape subscribing to services which both parties consider essential to the well-being of the country."—[OFFICIAL REPORT, May 4th, 1914, col. 89, Vol. LXII.]

If that is the object, the so-called object, of the Chancellor, I do not suppose there is a single Member of the House on whatever side he sits who is not in favour of preventing those who purposely endeavour to escape bearing their fair share of the taxation of the country from escaping in the way they endeavour to escape. What I object to, and pointed out in Committee, was that that object is not met by this Clause at all, but that, on the contrary, it will have results which are not at all in consonance with that object, and which results ought to be very carefully examined and ought to be avoided if the House is to be asked to support this Clause or any Clause like it. Let me first of all deal with the question of avoidance. I put to the Chancellor of the Exchequer in Committee two methods, one of which was now employed for investing and accumulating incomes abroad, and another which might be substituted if the person was found to be stopped, and I put it to him that unless he could show that by this Clause, or by the Income Tax Acts or otherwise, he could stop that form of avoidance, that then all he is going to do by this Clause is to tax those who are more scrupulous and to let off those who are sufficiently clever, we will say, or sufficiently unscrupulous to take advantage of the means which are at their hands. That criticism has never been answered. The Attorney-General said not a word about it to-day.

The Chancellor in his speech the other day said that the business men who are clever enough to think of schemes of avoidance are far too well employed in business to think about putting any such schemes into operation, and that it would not be worth their while. That is what he seems to rely upon. The sum involved may mean £500, or even £1,000 or more, by the mere change in methods. Do not let anyone think that that is too large an estimate, because if a £5,000 income was accumulated abroad that would mean at least the avoidance of about £500 in taxation, if you take the Income Tax and the Super-tax into account, because it would pay in each case the tax at the highest rate. If £10,000 was accumulated abroad, then it would mean £1,000 at least in taxation, and that is only referring to the Income Tax. The same means that could be taken to avoid the payment of Income Tax could to a, large extent be employed for the purpose of avoiding Death Duties, and if you take into account what it would mean if those methods were adopted for the purpose of avoiding Death Duties, then it might become very well worth the while on the part of anybody who choose to take advantage of the scheme. So that the Chancellor's answer that it is not worth the while of anyone to do so seems to me to fall far short of what is necessary to convince us that the wrong people are not going to be hit by this Clause. I think that the House is entitled to some more specific answer when a direct method is pointed out, and when the Chancellor is asked to say how it is going to be dealt with. That was pointed out in Committee, and I confess I pointed it out for the very purpose of warning the Chancellor that this Clause would be avoided. I do not want it to be avoided. If it is to be applied at all, it ought to be applied to all and equally. There was plenty of time between Committee and Report for the Government to consider this, and to put down whatever alterations in the Clause were necessary if they could prevent avoidance in the form that I pointed out to them. I believe it is because they cannot prevent avoidance that they have not made any attempt to meet it.

The Attorney-General, in answering, endeavoured to put my hon. Friend the Member for West St. Pancras on the horns of a dilemma. In dealing with the business, he said, "Do you not agree with the right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain), and do you not want business to be excluded from taxation under this Clause?" That was not the point at all that my hon. and learned Friend was making. What he was pointing out was this, that if the business is carried on by a partnership it is not taxed, and if, on the other hand, the business is carried on by a limited company, then it is taxed. How can you reconcile a Clause which leaves open such a vast difference between the people carrying on the same class of business, one as a firm and the other as a company, and having as the result the taxation of one and the leaving out from taxation of the other? What is the answer to that? Some people may think that all companies are big. But it may be a private company with two members only, and with just exactly the same capital as would have been employed in a private partnership. But because the two partners turn themselves into a limited company, with exactly the same capital, they are to be taxed, and those who remain as partners are not to be taxed. What is the Attorney-General's answer to that? He asks, "What do you want?" and he said to my hon. and learned Friend, "Of course, there are anomalies, and this is one that the Income Tax Commission will inquire into, but is it that you want to bring in the business man or is it that you want to leave him out?" What we say is this, that if you are going to start a new form of taxation, such as is contained in Clause 5, then do not start it before you have made your inquiries and got it into such a form that it will be fair to the taxpayers and equally fair to all taxpayers. The right hon. Gentleman is doing in this Clause exactly what he did with the Insurance Act. He is legislating first and proposing to run over to Germany to inquire afterwards. It would be far better for him to make his inquiry first and to legislate afterwards.

5.0 P.M.

There is one other point to which I desire to refer, and that is the question of insurance companies. I do not want to go into detail as to it again, but as no one has made any sort of reply, I think perhaps I ought to put in round figures a case which has come within my knowledge, and which has also come within the knowledge of the Chancellor, because I have here a copy of a letter which was written to the Chancellor giving the details of the case of at least one company. Let me remind the House what that case is, and let me state what happens now. Under Clause 5, the whole of the dividend and income from the investments of life insurance companies, whether they are in England or abroad, will be taxed quite irrespective of what the profits of the company are. They will be taxed as dividends and interest. In the case which I have in mind there is a company which has been established a largo number of years. It has branches in almost every Continental country, and in South Africa, the Argentine, Canada, and many other places. By the law of all those places where branches are, except three, the insurance company is compelled to deposit abroad in the hands of the foreign Government national securities—that is, money invested in the securities of that foreign Government. That is the condition of business, and so long as that company continues to carry on business that deposit has to be maintained. This particular company has deposited nearly four and a half millions of money in various national securities in the places where it carries on business. It cannot bring that over here so long as it carries on business in those countries. This company has an income from premiums of about a million a year. Eighty-five per cent. of that comes from foreign policy holders—that is, not British subjects at all, but policies derived from the deposits of those various sums of capital abroad. The assets are about ten and a half millions, of which eight and a half millions consist of foreign securities, or 79 per cent. The foreign assets are therefore about 79 per cent., and the liabilities of that company are about 83 per cent. foreign liabilities. In this company the foreign assets are actually not quite so great as the foreign liabilities. It is necessary to keep those assets abroad for several reasons—for example, the policies are met by, and the premiums are received in, the currency of the foreign countries in which the business is being carried on in order to avoid loss from the fluctuations in exchange, and the dividends of the various investments abroad, being received in the currency of the country in which the premiums and the claims are paid, go to balance one against the other. This is not a large capitalist company. The average policy issued amounts to £320, and 90 per cent. of the profits belong to the policy holders. So that the policy holders, relatively small people, are the people who will suffer from the particular tax which the Government are now proposing. The tax to them means that instead of a 1s. 3d. Income Tax they will have to pay a 7s. 4d. Income Tax, and that tax, being a reduction of the profits of the policy holders, will fall upon people whose average policy is £320, and who, consequently, are likely to be people who ought to be exempt from Income Tax.

Nor would the Government really be losing if they accepted the Amendment which I have on the Paper, but which I understand I shall not have an opportunity of moving, because 75 per cent. of the premiums are being paid to this company out of the savings of foreigners. Those savings would never come to this country, and therefore would not be subject to taxation here; but because they are paid to this company, and the company makes a profit, that profit comes over here and is taxed as such. Hence if this company and similar companies are so affected that they remove their head offices from England in order to escape Income Tax, the Government will lose the tax upon profit which they might fairly claim to have. My hon. and learned Friend pointed out that this is a grave handicap to British insurance companies, in relation to the competition which they now have to face from insurance companies founded in foreign countries and in the Colonies. Foreign and Colonial insurance companies, if carrying on such a business as I have described, would not have to pay any Income Tax at all, except upon the profits made in this country. They would not have to pay Income Tax on their dividends and interest; therefore British companies will be handicapped to a very large extent. The Attorney-General had this case before him, but he said nothing in reply. He has never attempted to justify the Clause in regard to insurance companies, or to contradict the statement of the case that has been put before the House. He has remained discreetly silent upon the subject. I hope the Chancellor of the Exchequer in his reply will attempt to justify the Clause as it affects insurance companies.

Do you intend to move your Amendment?

I am not sure that I shall have an opportunity of moving my Amendment; therefore I am putting the matter to the right hon. Gentleman now. Of course, if he would accept the Amendment, or any part of it, no doubt he could put a star to it, and then it could be moved in any event. But I wish the right hon. Gentleman to deal with two points—the question of avoidance and the question of the effect of the tax, not upon rich individuals who pile up their income abroad—I do not want those people to escape—but upon insurance companies and upon companies doing precisely the same business as that which is carried on by private firms. How can he expect the House to support this Clause so long as it is in its present crude form?

I am sure it must be the intention of the Chancellor of the Exchequer to deal with the very serious question raised by my hon. Friend in relation to insurance companies as affected by this Clause. The question is a big one; it is very important to British business, and almost vital to the companies themselves, for it is perfectly evident that under the provisions of the Clause, as it stands, they would in many cases, and might in all cases, be called upon to pay Income Tax on foreign investments altogether in excess of any profits they were making. So that it would be a tax not upon their income, if income is treated as profit, but upon such revenue as they draw from those investments, irrespective of whether that revenue is wholly profit, or even if it is only part profit, but is exceeded by their losses or expenses. I am well aware that the whole relation of insurance companies to Income Tax, even apart from this Clause, is a difficult one, and has been the subject of representations to the Chancellor of the Exchequer. But I do not think it will be a sufficient reply to the arguments of my hon. Friends to say that similar anomalies can be pointed to in our domestic law. You may be able to point to them, and you may not at present be in a position to relieve them; but that is no justification for inflicting such an additional and crushing injustice as would be inflicted by this Clause. I shall await with great interest what the right hon. Gentleman has to say upon that point. The Chancellor of the Exchequer challenged my right hon. Friend the Member for Fulham (Mr. Hayes Fisher) to point to specific cases of double taxation being paid by Colonists.

Which would not be protected by our words.

I agree with the answer of my right hon. Friend that it very largely depends on the question of domicile. Very few people except qualified lawyers would care to attempt to discuss in this House the question of domicile, which has afforded much material for discussion in the Law Courts, whose decisions, even now, often give the greatest difficulty to people who have to advise upon them. It will be admitted on both sides, and by nobody more readily than by lawyers, that there is perhaps no question of law which raises more points than the question of domicile. Yet in this Clause the Government actually propose to leave the Commissioners of Inland Revenue to determine the question of domicile, without appeal. I think that must be an omission. I do not know whether the officials of the Inland Revenue would themselves like to have this delicate and invidious task devolved upon them. I cannot believe that the Chancellor of the Exchequer and the Law Officers really think that this is a fitting subject to leave to a non-expert body without appeal. I submit to the Chancellor of the Exchequer, in connection with his challenge and his desire that there should be no cases of hardship in this respect, that it is very desirable that he should give a right of appeal on the question of domicile.

The answer of the Attorney-General today amplified, and with the offer that he made partly met, the case which I put with more or less success yesterday. I frankly admit, for my own part, that I was thoroughly dissatisfied with my attempt to make my meaning clear, and I was astonished that the Attorney-General understood so much of the point that I was trying to put. It is, I think, admitted by the Attorney-General that he is unable to draw any very logical line under this Clause—that there are cases practically on all fours, but which, owing to technical circumstances, will be treated differently, for instance, the case of a partnership, or the case of a company. I have been fairly answered on this point, and shown that I need not be afraid: I put the case of a man carrying on a Colonial business—the exploitation of land, a manufacturing business, or whatever it may be. He brings home part of his revenue, and puts the other part into the further development of his property or business. I think that case was met by the Attorney-General's statement that I was mistaken in supposing that such a man was affected by the Clause, subject to the qualifications which the right hon. and learned Gentleman thought it necessary to make. I do not profess to pin myself to the technical language, and I am not trying to claim more than the Attorney-General himself stated. But take the case of a man who owns property, a portion of which he has developed, and from which he derives a rent of £1,000 a year. Rents are subject to this Clause. The other portion of the profit is undeveloped, and cannot be developed until, say, roads are made. Of the £1,000 rent that the man receives, he brings to this country £500, and spends the other £500 annually in developing the further portion of the estate. Hitherto he would have been taxed on the £500 which he brought to this country. Are you not proposing now to tax him on the £1,000? You are Is that the kind of case described by the Chancellor of the Exchequer in introducing his Budget?

The Chancellor of the Exchequer and others have often put it in controversial argument with us on Tariff Reform questions that one of the greatest services that the United Kingdom can render to other portions of the Empire is to help to develop their resources by our superfluous capital. Are you helping if you put a British Income Tax on money which is earned in one of these foreign possessions which is at once employed to develop that foreign possession and which is never brought home? In due course the income which these investments there produce and the developments to which they lead will be brought home and will be taxed. But do you really want to tax money that may be employed in such cases of development as that? I cannot think that that is so, or that it is wise that you should. I will not go into any further points of detail, but I confess that so much of the discussion that I have listened to—and, of course, from the Committee discussion I was absent, and I must admit that I have only been able to give a very summary perusal to the brief reports in the papers, which are quite inadequate to inform me fully as to what took place in the House at that time—has produced on my mind very grave doubts as to whether this Clause will be successful for its avowed purposes, and whether it will not do a good deal which is not part of its purpose, avowed or otherwise!

Like my hon. Friend who has spoken, I take no exception to the Chancellor's announcement of his intention to deal with income rolled up abroad. I think it a perfectly fair and a perfectly proper thing to do; but I do suggest to the right hon. Gentleman, gravely and seriously, that the matter wants further consideration than he has been able to give it, and that it is not in the interests of the revenue to pass a Clause which hits a good many people whom you do not want to hit, which hinders that which you would like to encourage, and which will probably allow to pass through its meshes a good deal of income which men in all quarters of the House, irrespective of party, are agreed ought to be subject to tax—perhaps ought to be subject to taxing even before much of the revenue which is already attached for taxation. As to the cases which you admit, where you do not intend to do wrong or injury, but which you will do without intent, I draw my conclusions from the discussions which we have had, and in which very interesting and entirely non-polemical speeches have been made in the House. As to your failure to get revenue to reach the people whom you really want to reach, I draw my inference from the Estimates which the Chancellor of the Exchequer has presented to the House as the best his advisers can frame of the revenue to be derived from this proposal. If he really is of the opinion that this Clause was really going to be effective, I cannot conceive that the Inland Revenue authorities would estimate its yield at so low a figure. I am convinced that they have given him that figure because they are certain that a great part of the income which he means to subject to taxation will, in fact, succeed in evading it. Under these circumstances, without challenging the principle, and, indeed, while giving the principle my support, I say as my last word to the Chancellor of the Exchequer that I think he would be well advised to consider this matter further, to see whether he cannot meet the grievances put forward, and see if he cannot stop up some of the loopholes before we leave this Clause.

I will deal, first of all, with some of the points of detail raised by the right hon. Gentleman and hon. Members behind him. I would, first of all, deal with the question of domicile, of the position of the Colonial resident in this country. I had conferences with representatives of the Dominions, and a proviso was drafted to meet their views. It was submitted to them. It meets the criticisms that Sir George Reid made on the Clause as it originally stood in the Bill. The right hon. Gentleman the Member for Fulham is still nervous lest every bonâ-fide Colonial resident in this country—resident temporarily in this country—because that is the point—who comes here to stay for a few years, either to educate his children or for some other temporary purpose, should be hit. I am sure it will be agreed that there is a vast difference between Colonials who come here to make it their permanent abode and Colonials who come for a few years. It may be that it would be very hard if the right hon. Gentleman the Leader of the Opposition could escape taxation in respect of exactly similar property that the right hon. Gentleman, his colleague, the Member for West Birmingham is taxed for. It would be unfair. Therefore, in order to protect the right hon. Gentleman the Member for West Birmingham, we are putting these words in against this inequality. The thing would apply also to hon. Members in this House who are Colonial born: those who have cast in their lot finally with this country are Britishers for all practical purposes. I think they should be taxed just in exactly the same way as Englishmen, Welshmen, Scotsmen, or Irishmen, bred or born, but it is a very different thing when they have the intention of returning to the Colonies. I do not know the position of the hon. Member for East St. Pancras (Mr. Martin)—

Ask your Chief Whip.

That is a question to be decided. The right hon. Gentleman said, "It is rather a tall order that you should leave this question to be settled by the Commissioners." It is a question subject to Amendment, and I think my right hon. and learned Friend will deal with it at the proper time, and satisfactorily, I hope, from the point of view of the right hon. Gentleman. Therefore, I do not propose to dwell any further on that at the present moment. As to the question of rents raised by the hon. and learned Member for St. Pancras, if I understand him rightly, he rather objected to the rents being put into the category of the class of income that should pay tax in the same way as interest on other investments. I rather think he drew a distinction between these cases. I cannot see the difference. Take the case of one man who invests in money and land—

I do not think the right hon. Gentleman quite interprets me correctly. I say that the word "rent" ought to be a fully interpreted word.

Well, income from land—money which is paid for the occupation of land.

was understood to dissent.

The hon. and learned Gentleman's criticism is one, I think, of drafting. I take it that income that comes, that money which is paid for the occupation of land is equivalent to rent. I think the hon. and learned Gentleman will agree that it would be unfair to tax a man who puts his money, say, into Colonial railways, and not to tax the man who puts it into Colonial land. It would be unfair. Will the hon. and learned Gentleman accept that proposition to begin with. He generally, when faced with one proposition, jumps off to some other proposition. Let me first of all try to pin him down to some proposition. His contention is one that will not stand. Let us take another point raised by the right hon. Gentleman the Member for West Birmingham. He says, "supposing a man puts money back into the development of particular real property, why should you tax it?" You are putting him in exactly the same position as the man who puts his rent into the development of his estate here. That is all we propose to do.

Here he pays for the protection of his property to the Government which gives him that protection. In the case of a man abroad he does not get protection from the Government except in the sense that every subject of the British Empire is protected by the British Army.

There the right hon. Gentleman goes to the root of the taxation of this particular investment. If the money comes over here he is taxed now. According to the right hon. Gentleman he ought not to be taxed because we are giving him no protection. [HON. MEMBERS: "Hear, hear!"] That is a very serious proposition. There are two hon. Members who cheer that proposition, that the man who brings his money over to this country now in respect of foreign investments ought not to be taxed. Does the right hon. Gentleman say that that ought not to be done?

was understood to assent.

That is a remarkable proposition. He is taxed although he does not get the same measure of protection, according to the right hon. Gentleman, as he does here. The only exception we propose is, that if the money from real property comes over to this country he is taxed in respect of it, although that land is not protected by the British Army or the British police; he is taxed in respect of the income which is earned upon investments abroad.

He is taxed in respect of his enjoyment under security afforded by this Government.

No, the person who is receiving that money and is rolling up his wealth abroad is enjoying the same protection whether he spends the money here or whether he does not. There is the same measure of protection given to a man whether he is economic, or thrifty, or frugal enough to save his money and to roll it up abroad, or the person who brings it here and spends it here. I only want to point out that you cannot say to the landowner here: "We will tax you if you put your rent into development, but if you sell your land here and put your money into foreign land and leave it there and develop the foreign land, we will take care that we will not tax you." I agree with the right hon. Gentleman that it is very desirable that we should take our share in the development of the resources of the world. Other countries are taking exactly the same view of that position. They are competing with us in that respect. At the same time we do not want to say, "We will give you advantages when you do that abroad which we shall deny to you when you spend the money for development at home." In so far as it is money spent upon repairs and maintenance the reduction will be made whether at home or abroad. I have always been in favour, as the right hon. Gentleman knows, of as liberal an allowance as the revenue will afford in respect of money spent on maintenance at home. I think the thing is different with money spent abroad. I come to the point of the hon. Gentleman below the Gangway. He wanted to know what our view was in regard to the effect upon insurance companies. Insurance companies are practically in the same position here as in other countries. The hon. Member took a very exceptional case. It is a very dangerous thing to take an exceptional case. I do not think there is any other case of the kind.

It is all a matter of degree.

It is not quite. It is not really, and the hon. Gentleman knows that it is not. It is so completely different to any other case that there is nothing comparable. I think he said that it was a case where 90 per cent. of the money was represented by the Company's foreign investments. There is the case of the Gresham; but the Gresham is in a totally different position from many other insurance companies to which he referred. Of course, that is no reason why the Gresham should not have fair play. I am not contending that; but I do not think it ought to be put as the case of every company. There is no other case of the same kind as far as I am able to ascertain. The complaint of insurance companies is, they say we are able to bear it at the present moment, but now that you are extending the law, the inequality is one which has increased, and consequently they feel it much more difficult. I agree! My right hon. Friend (Sir Thomas Whittaker) in introducing the deputation which waited on me from the insurance companies, dwelt upon that with great force. I agree there is a good deal to be said, but what I say on the other side is this: Budgets of this kind which increase taxation also increase the business of the insurance companies. I do not say that is a final consideration, but I say it is a consideration. There is no doubt at all that Super-tax has had a great effect in improving the business of the insurance companies. It has been found very profitable, and they are pointing a way, I will not say of evading the Super-tax, but at any rate diminishing the amount of Super-tax you have to pay to the State. I should be very much surprised if the hon. Baronet the Member for the City of London has not discovered that. I do not think he is as innocent as he looks, in this respect, I mean. There is no doubt it increased their business very considerably also in the matter of meeting Death Duties.

The Budget of 1909 has had the effect of quickening the business of insurance companies very considerably, and I have no doubt at all that the present Budget will have a still greater effect in the same direction, so that I do not think insurance companies have very much claim from the point of view as to the effect on their business which these two taxing Budgets have had. These are general considerations. The only other consideration to which I think the hon. Member referred, is where they are usually bound locally to invest money in some of the States of America, I am not sure whether it applies in Canada—

It practically applies in every country.

I know it applies, but as against that, although money is invested there, and has to be kept there, as against the liabilities of the company in that country, still the hon. Gentleman knows very well that although it cannot go to the benefit of the policy holders in the United Kingdom—the money invested in these particular countries must be used for the purpose of meeting liabilities in these particular countries—at the same time he knows it must be to the benefit of the general body of the policy holders of the different nationalities. It has an effect upon the general business and position and prosperity of the company to that extent, although it is invested there, and although it has to be kept there, it has its effect upon the profitable capacity of the whole concern. It is not as if you cut it off altogether, and as if it belonged to another country. There is another consideration which I should like to put. My right hon. Friend, when he represented this very powerful and influential deputation, of practically all the great concerns in this country, submitted on their behalf two cases of what I consider to be undoubted grievances at present in the life companies. The first was the grievance they suffered in respect to the expenses and management, which they are not entitled to deduct, and I must say I feel that a case has been made out for allowing these expenses in so far as they are defrayed out of the interest of the company. This case was very substantially made out by the companies, and we think it is no doubt a grievance that ought to be dealt with. The second grievance which the company made out was that there was no differentiation between their position and that of the composite companies. The composite companies are in a much better position in respect to the basis of taxation than the life companies. The most formidable competitors of the life companies are not the foregn companies, but the composite companies, and they are placed at a disadvantage with companies which have other business besides the life business. Therefore, I agree, a serious grievance is inflicted upon companies whose business is confined to life business, and the Government are prepared to deal with these two problems.

This year?

Not this year. If we did it this year it should be done by means of a charge upon the composite companies. We think the way to deal with it is by placing the composite companies in the same position as the life companies, and not by putting the life companies in the same position as the composite companies. We found we could not do that on the Report stage or the Committee stage; it would not be a fair thing to do under the guillotine, because it would enforce a charge, and it is right that we should give fair notice to the composite companies on that, and that they should know exactly what the position was. We propose, therefore, next year to deal with these two particular propositions, namely, the question of the expenses of management and the question of the unfairness at the present time to the life companies as compared with the composite companies.

Is there not a third grievance—namely, while some of these insurance companies have paid their Income Tax all along, others were placing sums in reserve, so that those with a clean slate are prejudiced to the advantage of others who have not paid?

That is a grievance which the companies have not presented to me.

In a letter of the 15th of July very important Scottish companies pointed out that grievance.

The Scottish companies were represented, and very ably represented, at that deputation, as the hon. Baronet knows, and certainly that was not the complaint made. If there is a case of that kind, I shall be very glad to look into the matter.

made an observation which was not audible in the Reporters' Gallery.

We are dealing with one particular grievance so far as it benefits insurance companies, whereas at the same time we are leaving the revenue that protection which it ought to receive so far as the other grievance is concerned. We felt it would be unfair to deal with it in a partial way, inasmuch as it would involve very substantial loss to the revenue this year, whereas we would not have the benefit we are otherwise entitled to by remedying the other grievance, which is much greater. I do not know whether there is any other point. I have gone through the general questions put to me, and I think I have dealt with most of them. The hon. Gentleman the Member for Colchester dealt with avoidance. There is no doubt at all if a man sets his mind, and has nothing else to do, he can devise all sorts of schemes for the purposes of avoiding the revenue. But if he is busy it will be otherwise. It is the old story, "Satan finds some mischief for idle hands to do." When the hon. Gentleman, was busy he never thought about these schemes, but now that he is not so busy with his profession he has entered upon another partnership with that gentleman, who always puts mischief into men's minds. He has altered his partnership, and instead of being in partnership with honest solicitors, he has entered into a partnership with another, and he begins to devise all those malignant, mischievous, pernicious, poisonous methods for tempting honest people to defraud the revenue. The hon. Gentleman should occupy his mind with something else.

I was only attempting to assist the Chancellor of the Exchequer. He seems to pride himself on being my partner.

I am the person to be defrauded by these schemes which the hon. Gentleman, in conjunction with his new partner, is devising. Let me refer to another thing which the hon. Gentleman says, but which has really nothing to do with the subject now before us. He said, I am doing the same thing here that I did in connection with insurance. I first legislate, and than go to Germany to inquire. I went to Germany and investigated the question of insurance for two years before I attempted to legislate. That is simply the sort of fact which as a rule is used by hon. Gentlemen opposite outside. I am glad the hon. Gentleman has brought it up here, where I can contradict him.

Now, on the general question of this Clause, I really cannot understand the position of hon. Gentlemen opposite. The Attorney-General has put the point very well, and I do not know that I need repeat it. Hon. Gentlemen opposite say they sympathise with the object. It is the same old sympathy; it is the same old criticism of the method. What is the objection? Are they in favour of putting on a tax in respect of securities. They say "No; because you do not do it in regard to other businesses." Are they in favour of doing it for other business? "No," they say, "We are very glad you have not done it. You must not do it either for rents, because there is nothing that is equivalent to rents abroad." What is their remedy? Nothing but a sort of pious resolution which we can pass here, saying that it is highly desirable that foreign investments should be taxed in general, but not one of them in particular. How does the hon. Gentleman opposite propose to do it with regard to business? You must either include one or you must exclude the other. That is the only way you can produce equality. He says it is unfair to do it in the case of a man interested in a company unless you also do it for a firm. The only way to put that right is either by excluding everybody or including everybody who has got an interest in the business. Which is the hon. Member in favour of? Are hon. Members in favour of including business or excluding companies? If they are, what is there left? It is no use saying you are in favour of an object like this when you vote against every proposal to carry that object into operation. Hon. Members opposite have spoken in favour of people rolling up their money abroad.

They are not all rich.

I never said anything about rich people, and the hon. Member opposite seems to have got rich people on the brain. I am just talking about poor people who roll up their great incomes abroad. These poor men roll up their money in companies, in land, and securities abroad, and they ought not to escape when the rich of this country have to pay. I am for equality in this respect: A great landowner pays in full on his land, and I have some sympathy for him when others are rolling up their money abroad and avoiding taxation. I want equality of treatment. As my right hon. Friend has pointed out, this million has to be found somewhere, and if you do not find it out of these poor people investing their money abroad, you will have to find it out of the rich people who are investing their money honestly at home. The amount is equal to a penny on the Tea Duty, but I am sure hon. Members opposite would not like that. Do not suggest the cutting out of this Clause altogether, and at the same time say that you desire its object to be carried out.

The right hon. Gentleman has just said that he wants equality and fairness, but he legislates for inequality and unfairness. It has been laid down by previous Chancellors of the Exchequer, and by no one more emphatically than Mr. Gladstone, that the essentials of taxation are, first of all, that it should be fair as between the persons upon whom the taxes are imposed, and that they should stand in substantially the same position; and, secondly, that the taxes should be such that they might be easily and certainly collected. This Section transgresses both those principles. Can it be said that this Section imposes a tax fairly upon all persons who are in substantially the same position? I ask the House to consider a concrete case to show the unfairness of this tax. Take the case of two men residing in England, each carrying on a similar kind of business in Australia. One of these men forms a company to carry on his business although it remains substantially his own business. From that moment he is taxed under this Clause not only on the profits of that business which he brings to this country, but on all the profits derived from that business, whereas the other man in precisely the same position, except that he does not turn his business into a private company, is taxed only upon so much of his profits as he chooses from time to time to bring into this country. They are two men in the same position. One of them is heavily taxed and the other, if he chooses, need not be taxed at all. That is an instance of the unfairness of the injury which is inflicted by this Clause. It is no use the Chancellor of the Exchequer talking about equality and fairness and then proposing to do that which is manifestly unfair.

There is another case in which this Clause will transgress the well-established principles I have just mentioned. The collection of the tax will be most uncertain here. Take the case, which has been discussed, which was provided by the Attorney-General at the end of his speech: A man is not to be taxed under this Section if he is not domiciled in the United Kingdom. How are you to decide whether he is domiciled in the United Kingom or not? Take a man from Australia who comes over here, buys a house, and lives here. Who is to say whether he is domiciled here or not? Questions of domicile are always most difficult to decide, even when the man is dead, and you have to determine the question from his acts during his life. But when you have the man alive and he has only to say, "I intend to retain my domicile of origin," how are you going to prove that he has abandoned that domicile and adopted domicile in the United Kingdom? The Attorney-General gave some estimates—I am always rather sceptical of Government estimates—but does he suggest that those estimates show the amount of tax that will be paid by foreigners and Colonials domiciled in England? How can you determine whether a foreigner or a Colonial is domiciled in the United Kingdom? You cannot decide it, and you will simply enable all Colonials, whether really domiciled here or not, if they say, "I intend to retain my domicile of origin," to defeat your object, because you could not say that their intention is something different.

You are going to tax income arising from securities, stocks and shares. We know that nearly all foreign stocks and shares are not disclosed, and you have to estimate your tax upon whether a man discloses truthfully all stocks and shares he has in foreign countries. If a man is minded not to disclose them, how are you going to make him do it, and ascertain whether he is entitled, for instance, to any number of securities in America? There is no means by which you could find out the truth of the matter or ascertain what a man is entitled to and what he is not. The result would be that you would tax heavily the man who has honestly stated everything he possesses and you would let off the man who does not make a clean breast of what he possesses, and that man would know that you have no possible means of detecting him. That is another illustration of the transgression of the well-established principles of finance which I have mentioned.

By this proposal you are putting a heavy premium on dishonesty. No one will doubt that there is enough temptation to-day to make incorrect returns, and if you are going to make the return the only criterion, without any possible means of detecting whether it is true or not, you are putting a very heavy premium on dishonesty, which will, no doubt, be accepted by a very large number of persons, and the result will be that they will not make true returns. There are other questions involved in this proposal. It is said that you are going to charge Income Tax in respect of income arising from rents. What do you mean by incomes arising from rents? What is that income? And who is going to determine it? That is another illustration of the uncertainty which is involved in carrying this Clause into practice. Criticisms have been passed upon this Clause so freely and of such a character that it is almost impossible for the Chancellor of the Exchequer or the Attorney-General to answer them. Bearing in mind that the whole question is very shortly to be submitted to a Royal Commission, surely it would be better, before you embark upon crude legislation of this sort, which is calculated to do great injustice to certain men and which is not calculated to yield anything large in the way of income, that we should wait until the whole matter has been considered by a Royal Commission, and then we may hope to have some reasonable fair and settled legislation, which will carry out the object stated by the Attorney-General, which we all desire to achieve, namely, to charge those men who have large properties abroad when they roll up their income abroad instead of bringing it into this country.

I desire to thank the Chancellor of the Exchequer for the statement he has made, and the promise he has given as to what he intends to do in the Budget next year. Of course, we would rather have had it this year, and that is always the case, but failing that we are obliged to him for his undertaking to rectify this injustice on the next occasion. In regard to income from foreign investments, personally I am of opinion that it is right that it should be taxed; but so long as it was not taxed you could not blame anybody who had foreign investments for collecting their money in order that it should not be taxed. That was avoiding a tax, but it was not evading it. So long as that was the law the money was collected abroad, but now it will have to pay tax. The hon. and learned Member opposite complained that the money would have to be paid upon the declaration of the individual. There is always a certain amount of the Income Tax that does depend, and must depend, upon the personal declaration of the individual and upon personal honesty. It is true that so far as that is concerned there is a temptation to a man to be dishonest. That exists to-day in a very considerable portion of our tax law. The general complaint is that our Income Tax authorities look after these things pretty closely, and I do not think that there is a great deal that escapes through the net. That, however, is surely no reason why we should have a much wider and further abandonment. The Chancellor of the Exchequer referred to the fact that the insurance offices will feel the pressure of the grievances which they have put before him much more keenly now that this foreign income is to be taxed. The grievances existed before, but the fact that we could avoid a very considerable portion of the tax by collecting our income abroad made the pressure of them less severe. The pressure now is to be very much accentuated, and that is why the point has been so strongly pressed upon the right hon. Gentleman. He has undertaken that next year expenses of management will be allowed in so far as they come out of interest. That is a very substantial and welcome concession. With regard to the difference between life insurance offices only those which are known as composite offices—that is, offices doing life, fire, accident, burglary, and other business—there has been a distinct inequality and grievance. The suggestion of the life offices was that the right hon. Gentleman should put them into the same position as the composite offices. His view rather is that he should put the composite offices into the position of the life offices. We have not asked that. All that we ask is that the grievances should be remedied, and that they should be remedied by putting us into the same position as they are in. The right hon. Gentleman seems to have made up his mind to do it the other way, and it is to be done in the next Budget.

The Chancellor of the Exchequer suggests that the increase in taxes benefits life insurance offices by promoting life insurance business. That is true to some extent, but, so far as the mutual life offices go, increasing business is no advantage whatever to the policy holder. It is no advantage whatever to a policy holder in a mutual office that the office is getting a larger amount of extra business. If it has got a sufficiently large business to give a good average for its lives, then it is no advantage to increase its business unless it can do so at a lower rate of cost than it has been able to do previously. Consequently, the increase of business is no advantage to the policy holder. The policy holder is practically the owner in mutual life offices. On the other hand, it is undoubtedly true that an increase of business is an advantage to a proprietory office, because the proprietors take a percentage of the surplus. If the total amount of the surplus is larger, although it may not be more per policy holder, the shareholders benefit. So far as the mutual offices are concerned, the increase of business is no advantage to the policy holder. Therefore, although it is true that the influence of these increased duties is to promote life insurance business, it is no advantage to the policy holder in the mutual life insurance office. My main object was to acknowledge the care and attention which the Chancellor of the Exchequer and his officials have given to this matter, and to thank him for the promise which he has made. We should have liked it this year, but we are very much obliged to him for promising it us next year.

The learned Attorney-General, who poured scorn on my new Clause last night, can hardly, after the announcement to-day that the Government have accepted it, claim the attribute of infallibility as an occupant of the Front Bench. I will not pursue that; it is enough for me that the principle has been accepted for which I contended last night. The Attorney-General and the Chancellor of the Exchequer both characteristically left out of account the poor man whom this Clause will fine. They both assume, as a matter of course, that the Clause is only going to tax the rich man. I ventured to interpolate the remark that there were others than rich men affected, whereupon the Chancellor of the Exchequer said, "Who mentioned rich men?" That was trifling with a serious subject, because right throughout he has been talking solely of rich men who evaded payment, and he has devised this Clause to reach them. He then proceeded in the most dramatic way, and in his best platform manner, to refer to rich men who are rolling up their investments abroad. I submit that there are very poor men who keep, and have to keep, investments and the income from investments abroad. I am going to speak seriously upon a matter with which the Chancellor of the Exchequer trifled. Take the case of the Indian or Ceylon official. That man, while in office, with a view of providing for his family, probably buys a small tea or coffee estate. He comes home to England, but at the same time he has investments in this little estate in the place where he served, and ho has to keep that going in order to provide an opening for one or two sons. He is, in every sense of the word, an extremely poor man—not the monk and make-believe poor man of whom the Chancellor of the Exchequer spoke. He has to leave a part of his income as well as his investments abroad, but it is very far from being the case that he leaves his income abroad rolling up, as the Chancellor of the Exchequer said, for the purpose of evading the tax. There must be an enormous number of cases of that very sort, and there are probably, although I am unacquainted with them, an equally large number of cases of a similar character which are hit by this Clause and in which the men, so far from being individuals rolling up money abroad and escaping the Income Tax, are individuals who are painfully endeavouring to provide for their families in circumstances of difficulty.

No man is likely to roll up incomes where the Chancellor of the Exchequer, the inventor of schemes of Socialistic legislation to be payed for by the taxpayer, whether he is to be caught in this country or abroad, can get near to him with his army of inspectors. I am not concerned to defend this Clause. I would have voted against it in Committee. It is an unfair Clause, and I am utterly opposed to this principle of grasping the British subject wherever he is. He should pay taxes where he obtains protection, where he lives, and where his income is received and spent, and he should not be taxed elsewhere. The principle here is an inversion of another principle, a manifestation of the same principle which would bring the Empire down with a run—I mean the claim that every citizen of every component part of the British Empire has equal rights—and which has led to a tragic comedy which is now being played at Vancouver. This grasping of people abroad to pay this tax is a bad principle, and I hope there will be a Division upon the omission of the Clause, when at any rate those who object to the Clause altogether will have an opportunity of coming out into the open and voting against it. My particular object has been to urge that it does not only affect the rich. The hon. Gentleman (Mr. Montagu) shakes his head. He was kind enough to inform me that he always differs from me when I speak. I regard that as a very handsome testimonial to my political integrity and rectitude when I reflect on his latest essay on Indian legislation.

I do not think that sufficient has yet been made of the strong opposition there is in British possessions to this Clause. Reference has been made to the opposition of the self-governing Dominions. They, by their opposition, have wrung from the Government an addition to the Clause as originally drafted which may be presumed more or less to meet their case, but little has been said of the opposition of India. When they appeared before Lord Crewe to urge their case, Lord Crewe in his answer recommended that process which is so dear to the Chancellor of the Exchequer, the process of legislating first, and repealing or amending or altering afterwards. He gave them no satisfaction in regard to that matter. The Attorney-General and the Chancellor of the Exchequer both said that if this money is not found in this manner it will have to be found by other means, and that the burden will be thrown upon other taxpayers. I dispute that altogether. It is an absolutely inaccurate statement. It is not necessary that this money should be found. There should be a saving in the expenditure of the Government by abstaining from expenditure. This money, and more, might be saved for these and other reasons. I submit that there is no occasion for passing this Clause, which will hit the poor as well as the rich, which is in itself based upon an unjust principle and which should be omitted from the Finance Bill.

I want to know whether this Clause will not operate very unfairly where investments have been made in one of our Dominions. I believe that there is an Income Tax in India, Australia, and New Zealand. A person owning securities in those countries will have to pay, as I understand it, Income Tax in India, Australia, or New Zealand, and will also have to pay Income Tax in this country. It also appears that, although an Income Tax has just been imposed in America, it is remitted in some if not in all cases if a person can prove that he is a British subject. I am not sure whether I am right, but that is how I understand it. If you take the money and invest it in a country where there is no Income Tax imposed, then the Income Tax has to be paid but once. I cannot help thinking this particular policy on the part of the Government will have a very bad effect in the direction of discouraging people from investing their money within the British Empire. They will prefer to invest it in countries where there is no Income Tax imposed. I hope the Solicitor-General will give me a plain answer to my question. I want to know exactly how we stand in this matter. It strikes me that if you go on double-taxing incomes, you will drive people to take up their domicile in Canada or elsewhere, and then you will not only lose the Income Tax, but you will lose all the money which they would have expended had they resided in this country, as they would have done if you had not doubly taxed them.

I was rather surprised at the speeches we had from the Chancellor of the Exchequer and the Attorney-General, and with the way in which they dealt with this question, so far as it concerns insurance companies. The Chancellor of the Exchequer, referring to the particular company which had been in communication with him, stated that, as far as that company was concerned, it was a case that stood by itself. I should like to draw the attention of the Government to a fact of which apparently they are not aware, that when an insurance company proposes to do business in other countries, either in the Colonies or in foreign lands, it has, first of all, to deposit a considerable amount of capital, and then, for the protection of the policy holders, it has to deposit the whole of the premiums in that country. The money is consequently invested in those countries, and according to the conditions of the country the premiums have to bear their proportion of taxation. In the case of a British insurance company doing business abroad, the interest on the premiums has to be calculated as profit, irrespective of the amount disbursed on the policies that have been met, or whether or not there is any surplus. They are all treated as profits, and then, in this country, they are to be called upon to bear the additional Income Tax which this Bill proposes to impose, but of which, up to the present, we have been free.

The Chancellor of the Exchequer, in the course of his speech, said he would like to have brought to his attention cases in which people have had to pay the Income Tax twice over. I would point out that not only do the insurance companies so pay, but their contributors also do so, and a man who has shown thrift, and has put his money into insurance, bears this burden equally with the insurance companies. Remember that, in order to secure a fair proportion of the business, the insurance companies divide the bulk of their profits amongst their contributors, and then you will appreciate the fact that this double tax is borne not merely by the wealthy insurance companies, but also by the policy-holders, whose average interest is considerably less than £300. Surely the Government and the House will recognise the fact that by the imposition of this tax, irrespective of whether any profit is made, another burden is being put upon the poor man who is desirous of providing for his wife and children hereafter, because by this tax you are taking away from the profits which he might reasonably expect to go to increase the value of his policy. To my mind, it is both inequitable and unfair that this tax should be levied in the manner proposed. My hon. Friend the Member for Wandsworth (Mr. Samuel Samuel) had the courage of his convictions when he told this House plainly that, as far as he was concerned, he was adverse to this tax. I can quite understand the Chancellor of the Exchequer having to look round and see how he can raise revenue, and yet not having the pluck to say that, having gone into the question as regards protective measures, he is not prepared to seek to raise the revenue from other sources. I should have thought that it would have been quite reasonable for him to have done so, seeing that we are told that the amount to be eventually obtained from this source, is only £470,000. I should have thought that taking into consideration its dangerous bearing with regard to particular insurance companies, the Chancellor of the Exchequer might have considered whether, under the circumstances, it was not possible for him to raise the revenue in some other way.

But I suppose there is no hope for that. All we can expect is that in perhaps two or three years' time the Chancellor of the Exchequer will fulfil his promise to provide redress for the grievances which we say are likely to be created, and then probably he will press hardly again on the composite insurance companies, and they will be subjected to further forms of competition as if they had not sufficient at the present time to cope with. It means driving more of our business into the hands of the foreigner. The Chancellor of the Exchequer says, "Because I happen to have a grievance drawn to my notice—and I admit it is a grievance—I have looked round to see on whose backs I can place the burden, and I think the easiest thing for me to do will be to say that the insurance companies, who are doing business abroad, shall bear it," irrespective of the fact that foreign insurance companies are allowed to come here and do all classes of business without making any deposit, and without contributing to the upkeep of the country, the only exception being that a deposit is necessary in the case of life insurance. I hope the suggestions which have been thrown out to the Chancellor of the Exchequer this afternoon will cause him to reflect before he takes the step which he has indicated. It is hard enough for insurance companies, in many cases, to get a reasonable return for their money, and if this new plan is adopted it will only be one more instance in which the Radical party and Government are doing all they can to crush out British industries.

The Chancellor of the Exchequer also told my right hon. Friend the Member for Fulham (Mr. Hayes Fisher) he would like to be informed of cases in which people domiciled here had been asked to pay two Income Taxes. I can quite see the elasticity of the word "domicile," and I can foresee it again fought out in the Courts of Law, as so many points have had to be fought out as a result of recent legislation by the Government. The Government have stated their ideas as to the meaning of certain terms, but when cases have had to be fought out in the Law Courts, in a great majority of the actions the Government have been proved to be entirely in the wrong, so far as their theory is concerned. Therefore I can quite foresee, in regard to this word "domicile," that notwithstanding the statements which have been made by the Chancellor of the Exchequer, many people will eventually be asked to pay Income Tax on their investments abroad, and when they get their dividends in this country will also be called upon to pay Income Tax upon them here, notwithstanding that they may have no direct control over the business in the Colony. The hon. and learned Member for West St. Pancras (Mr. Cassel) dealt particularly with the hardships which would be created with regard to private companies. This is a very important point, and we cannot too often bring it to the knowledge of the Government.

Some time back I suggested an Amendment to the Government which would enable people doing business as private companies to get over the difficulty, and which would place private traders in exactly the same position as those carrying on business in partnership—because in many cases you have two, three, or four men binding themselves together for the purposes of necessary and reasonable protection, and it may be in some cases for the protection of one partner against another. If private businesses are excluded from this Income Tax I cannot see any reasonable excuse why private companies should not be treated in a like manner. I asked the Government simply to insert the word "public" in order to effect that object, and I think it was a proposal they might reasonably have accepted. I am sorry, notwithstanding all the cases that have been brought to their notice, the Government have met us with the usual non possumus, and apparently they intend to pay little or no attention to the complaints of those for whom they have, in the past, stated their sympathy. I hope it will be plainly and straightforwardly proved to the great majority of the poorer classes in this country that there is a necessity for some alteration in regard to our legislation.

I desire to support this Amendment. The Attorney-General rather gibed at us because we had no principle in regard to this Amendment. Although some of my hon. Friends do not seem very clear on that point, so far as I am concerned I say that the whole principle of this Clause is bad. It is a vicious principle that large corporations with British capital finding employment in the United States, and taking many hundred of thousands of risks there, should not only be liable for those risks, but should have to pay a heavy Income Tax in this country on the dividends received from that money. It is a principle which ought not to be adopted in the Budget of any Chancellor of the Exchequer in this country. Another vicious principle of the Clause is that you are setting yourselves to induce Englishmen to get out of the responsibility of living in England. You will find that, where very large sums are involved, men will take legal advice to see how they can rule themselves out of being domiciled in this country, in order to escape this tax. You have only to give a measure of this kind some ten or fifteen years, and you will find hundreds of men so arranging their business, their domiciles and their lives, that they will get out of this tax.

We have seen that happen in the United States. Objectionable taxes were put on by certain States, and immediately they ceased to be the centres of finance. New companies registered themselves in States where the objectionable taxes did not exist. The same kind of thing will happen with regard to this Clause and the domicile of an individual. We are talking about the Income Tax in this country, but if no money comes into this country it cannot be an Income Tax. You are endeavouring to obtain money from an income which remains abroad. I could mention cases in the City of London where the business is a private firm so far as England is concerned, but is a limited liability company in every other country in the world where the same business is carried on. That is done for the simple reason that the heads of the firm in England limits its liability in every country in which it has branches by forming those branches into limited companies. I would remind the Solicitor-General that in the cases of persons who leave the income from their investments to accumulate abroad, they have to settle with the Chancellor of the Exchequer in regard to Death Duty. Those accumulations are then taxed. In that way the Chancellor of the Exchequer gets a great revenue from the Death Duties on the estate of an individual who has shares abroad and leaves the money to accumulate there at compound interest. I sincerely trust my hon. Friend will press this matter to a Division.

In view of certain Amendments which the Government have promised to make in this Clause limiting its effect, and in view of the fact that I said I was not opposed to it in principle, I ask leave to withdraw the Amendment, although I still think the Government are not wise in not referring this matter to the Royal Commission.

The whole substance of this Debate disappeared long ago. There is no life in it. There being only this day for the Report stage, I am utterly astounded that hon. Members should have occupied hour after hour on a subject like this without intending to divide the House. It has been with the utmost difficulty that we could get from any speaker on the other side a statement as to whether he was opposed to the Clause or not, or whether he was going to vote or not. The last speaker said he was against the Clause on principle, but immediately he sat down up got the Proposer of the Amendment and asked leave to withdraw it. That is not treating the House with respect, and I decline to allow the Amendment to be withdrawn.

May I have an answer to my question?

I shall be glad to answer the hon. Member. The answer is quite simple. If a man pays Income Tax on a foreign investment abroad, he will still pay Income Tax on the income that he receives over here. The Amendment that the Chancellor of the Exchequer has put down will prevent the Income Tax that is paid in this country being assessed on the total income, and it will only be assessed on the net income. Nevertheless, it is quite true to say that the total income will bear two Income Taxes. I would point out to the hon. Member that it does so at the present moment if the income is received over here. All that this Clause does is to make the income bear just the same burden if it be retained in some foreign country.

The hon. and learned Gentleman has not answered my question: Is it or is it not true that in some cases where English money is invested abroad only one Income Tax will be paid, whereas, if it is invested in our Colonies, where there is also an Income Tax, it will pay two Income Taxes?

I am very sorry I did not make the matter clear. Let me restate it. If a man has invested his money in a country, whether one of our own Colonies or a foreign country, where no Income Tax is paid, he will only pay one Income Tax. If he has invested his money in any place, whether it be a foreign country or one of our own Colonies, where the Income Tax is paid, he will pay two Income Taxes. I am pointing out to the hon. Member that that is exactly what he does at the present moment.

No!

It is absolutely what he pays at the present moment if he receives the income over here. The only thing Clause 5 docs is to make him bear just the same burden if, instead of receiving it over here, he keeps it in the country where the investment is.

I beg to move, after the word "and" ["allowances as if it had been so received and"], to insert the words "to the deduction (where such a deduction cannot be made under any other provision of the Income Tax Acts) of any sum which shall have been paid in respect of Income Tax in the place where the income shall have arisen and."

The object of the Amendment is to prevent the Income Tax charged here being paid on the total income actually received in a foreign country. We had a considerable Debate over this question last night, and I am glad to see that the Government have now come to a different conclusion from that at which they arrived yesterday evening. I am moving the words they have suggested. As to the word "paid," I am not sure whether it would not be better to use the word "charged," because I understand that in certain Colonies the Income Tax is not always collected in one lump sum, but that the proprietor of the income is either entitled or forced to pay his Income Tax in portions, either once a quarter or once every half-year. Therefore it is possible that at the time of making a return he might not possibly have paid the total amount of the Income Tax, and it may be better to use the word "charged." I do not know which word the Government prefer.

I beg to second the Amendment.

As the hon. Member has said, he has moved this Amendment in this form because it is the form in which the Government were prepared to ask the House to accept it. It is not necessary for me to add anything to what he has said. When my right hon. Friend the Attorney-General was addressing the House, he explained and read the words of the Amendment with a view of showing what our intention was. In regard to the word "paid" and the word "charged," the matter was carefully considered by the Law Officers and our advisers, and we believe that the Amendment is watertight, and that the word "paid" is better than the word "charged."

I beg to move, to leave out the words,

"and in particular for the purpose of computing Income Tax in respect of securities, stocks, shares, or rents to which this Section applies in pursuance of the rules under the fourth and fifth cases in Section one hundred of the Income Tax Act, 1842, the income arising from the securities, stocks, shares, or rents shall be substituted for the sums, profits, or gains, as the case requires, received therefrom in the United Kingdom,"

and to insert instead thereof the words,

"and nothing in those provisions as to the receipt of sums in the United Kingdom shall be construed so as to render liable under these rules to Income Tax for the current or any subsequent year any sums which represent—

(a) income from any such securities, stocks, shares, or rents, on which Income Tax has been paid under this Section; or

(b) income from any such securities, stocks, shares, or rents which was paid or became due before the sixth day of April, nineteen hundred and fourteen."

I will deal in a very few words with the Amendment which stands in the name of my right hon. Friend the Chancellor of the Exchequer. The House will remember that in Committee on this Clause a controversy arose between the Attorney-General on one hand and some hon. Members on both sides of the House as to whether it was quite clear what the Clause meant. It is not the intention to take advantage of the fact that when Clause 5 is passed the interest on securities which has been accumulating abroad will come into this country. It is desirable that it should not be taxed twice, both under Clause 5 in the year 1914–15, and under Sections 4 and 5 of the old Income Tax Act in 1915–16. As, therefore, it is only desired to tax the income of the year, and as that intention was made plain and debated during the Committee stage, in accordance with the promise then made, we suggest that these words should be added to make the meaning quite clear.

I beg to move to leave out the words "satisfies the Commissioners of Inland Revenue that he."

The object of the Amendment is to give an appeal from the decision of the Commissioners. The question whether a person is domiciled in the United Kingdom is a very difficult question of law and fact, and one on which there ought to be an appeal from the Commissioners. I understand the Government are prepared to concede some form of appeal, which is one of the questions to which I attach very great importance, but I understand they do not quite accept the form of words which my Amendment suggests, and wish to put in some other words in their place. So far as the exact form of giving the appeal is concerned, I am quite prepared to accede to the suggestion of the Government, provided I have an assurance that words will be moved which will give the subject a right of appeal on this very important question.

I beg to second the Amendment. It is most important that there should be some right of appeal from the Commissioners on this matter. The unfortunate individual ought to have some right of appeal to some higher Court of justice.

I am not sure that I agree entirely with the suggested difficulties which have been put forward in the course of this Debate as those which will arise in determining what is a man's domicile. It is not an infrequent dispute in our own Courts, and it is capable of determination. I feel, and the Government feel, the force of the suggestion that the determination of this question may involve very important consequences to certain people, and that it is therefore only right that they should have recourse to the Courts, and not be precluded by a decision arrived at by any body of people, however trustworthy and responsible they may be. It is therefore proposed to move an Amendment to this effect: "Any person aggrieved by any decision of the Commissioners of Inland Revenue on a question of domicile or residence, under this provision shall have the same right to require the Commissioners to state a case on the question as an appellant has to require a general or special Commissioner to state a case on a point of law, and Section 59 of the Taxes Management Act, 1880, and any rules made for the purpose of that Section shall apply accordingly." As the hon. and learned Gentleman knows, that makes a consistent right of appeal in regard to all questions arising under the Income Tax Act. I think he will also agree that the appeal is in the most convenient possible form and the one least burdensome to the subject, and the one in which it will be most readily possible to have the matter effectively, quickly and, I think, as cheaply as possible determined. I shall therefore be prepared to move that, if this satisfies the hon. and learned Gentleman.

In view of the statement of the right hon. Gentleman, which meets the point of granting the appeal, I ask leave to withdraw my Amendment.

I beg to move, after the words last inserted, to add the words,

"Any person aggrieved by any decision of the Commissioners of Inland Revenue on a question of domicile or of residence under this provision shall have the same right to require the Commissioners to state a case on the question as an appellant has to require a general or special Commissioner to state a case on a point of law, and Section 59 of the Taxes Management Act, 1880, and any rules made for the purpose of that Section shall apply accordingly."

Is not this an extraordinarily lengthy Amendment to provide for a very simple object?

I can assure the hon. Member that we have done our best to prepare the Amendment in such a form as to make it complete and comprehensive, and it is not possible, in our view, to make it any shorter.

Does it apply to residence as well as domicile?

Yes, it does.

Would it not be possible to frame the Amendment in such a way that the Commissioners should not be the sole and final judges of the fact? The difficulty is this. When you come to a question of domicile the only question is one of fact. You cannot state a case as to whether a man is a liar. The question is whether you believe the man or not when he says, "I intend to retain my domicile." But there is no question of law on which you can state a case. I should have thought that on such an important question as that it should not be left to the decision of the Commissioners, but there ought to be some kind of means of bringing a question of fact before an Appellate Court.

The next Amendment is in the name of the hon. Member (Mr. G. Locker-Lampson).

You have passed over an Amendment which stands in my name. Am I to understand that by reason of the kangaroo we are prevented from moving it in the interests of insurance companies and policy holders?

I exercise the duties which are imposed upon me to the best of my ability.

I beg to move, at end of Clause, to add the words "and the expression 'child' shall be extended to include a child permanently adopted."

This is a very modest Amendment—not nearly so ambitious as a great many which have been proposed, and I think I can safely say it is a very cheap Amendment. I hope on both those grounds that the Government may be able to look upon it with favour. At present no relief at all can be obtained in respect of an adopted child for this reason, that the term "child" under the Finance Act, Section 68, in addition to a legitimate child, only includes a stepchild or an illegitimate child whose parents happen to have married afterwards. But take the case of a widow with two or three children having to earn her own living. In order to relieve the burden of those children, it is quite possible that relations and friends may come forward and adopt one or more of those children permanently. In fact, it often happens. They undertake to bring them up and educate them and provide for the whole of their maintenance. Take the case again of a father who is left with young children. It is an enormous relief to him that someone should come forward and permanently adopt one or more of the children who have been left behind, to look after their interests and their education, and, of course, it is not only an enormous relief to the father, it is of the greatest benefit to the child, who cannot possibly be looked after by the father if he happens to be a working man, out at his work all day long.

But under the existing law adoptive parents cannot get any relief under this Section or under previous Acts. I really do not think it is fair. I think it is only fair to help those people who, out of kindness and generosity of heart, come forward and agree to permanently adopt the children of other people who happen to be in very poor circumstances. I cannot conceive anybody going to the trouble and expense of adopting a child merely in order to get the relief I am trying to persuade the Government to give. It certainly would never happen. I think it is quite conceivable that want of relief, and holding the relief back, will very often discourage the adoption in cases where it would really be of inestimable benefit. I have no estimate of what the cost will be, but I cannot imagine that the cost will be at all large, and I am certain that it would not be anything but a very small proportion compared with the great benefit which would accrue to a great many poor people.

The Government may possibly reply that it is impossible to define the term "permanently adopted." But, after all, that will have to be a question of fact, and all through the Income Tax laws it is over and over again a question of fact as to whether a tax has or has not been paid, or whether relief is given or not. For instance, take the case of the control of a company. It very often has to be decided whether the control of a company is in this country or abroad. That is merely a question of fact. There is no absolute definition. Take, again, a trader's profits. It has continually to be decided what really are the profits. It has to be decided whether what ought to be profits appear in the accounts of the year. That, again, is merely a question of fact. Take, again, the Chancellor of the Exchequer's own Clause 5—the question of domicile. That, again, is merely a question of fact as to whether a person is domiciled or not in this

I beg to second the Amendment.

It is impossible really, to accept this Amendment, and I cannot help thinking that when the hon. Member sees the difficulties it would produce, he will understand that himself. He proposes to make a concession in favour of those who permanently adopt a child. It is impossible to say that a child is permanently adopted. You might adopt a child to-day and abandon it to-morrow. There is no such thing known to the law as "permanently adopted." Nobody suggests that you can have a child permanently adopted, and, therefore, this Amendment would enable a person to adopt a child in order to get relief for a few months and then to get rid of the child. I think the only way of dealing with this matter is to confine the Clause to those for whom the reduction was originally intended.

I beg to move, at the end Clause, to add the words,

"Section sixty-eight of the Finance (1909–10) Act, 1910, shall read as if for the words 'five hundred' the words 'one thousand' were substituted."

By the Finance Act of 1909–10 it is provided that wherever a person who is liable for Income Tax proves that his income does not exceed £500, and that he has a child or children under sixteen years of age, he is entitled in respect of each child to relief from Income Tax on £10 of his income. By the present Bill that is altered to £20. My proposal to substitute the words "one thousand" for "five hundred" is avowedly in the interest of public servants abroad, and more particularly in India. I venture to submit that it is very advantageous that officials from our British Possessions with sons who are likely to follow in their footsteps should have the advantage of giving them educa- tion in a public school. By common consent of those acquainted with this subject, they make better administrators in foreign countries than those who have not enjoyed that advantage. I suggest that the limit should be altered from £500 to £1,000, in order to give this class a chance of giving their sons this kind of education. My hon. Friend the Member for the Wirral Division (Mr. Stewart) moved last night that a reduction of Income Tax should be allowed in respect of the amount spent by parents on the education of their children, and, in reply, the Attorney-General rather unfairly said that it was a proposal that every man who sent his son to Eton and paid £300 for his education should have a corresponding reduction in respect of the amount upon which Income Tax is charged. There is very little chance of men who have only £1,000 a year sending their sons to Eton. I submit that it is perfectly clear that men with £1,000 a year all told—they do not get so much net—cannot afford to send their sons to Eton. I think the privilege mentioned in the Chancellor of the Exchequer's first Act should be extended. This is quite a moderate proposal, and, for the reasons which I have given, I venture to commend it to the favourable consideration of the House.

I dealt with this matter before in reply to the hon. Gentleman; I forget whether when he was proposing an Amendment or foreshadowing this Amendment. I still adhere to the view which I then expressed, that if there is any extension it should be an extension of the allowance. I would very much prefer to increase the amount of the allowance to incomes under £500 than to extend the limit. People with less than £500 who have children are very hard hit by Income Taxes and rates. It is a very serious matter for persons with these incomes who have to try to keep up an appearance for professional purposes and the purposes of their business, as well as to spend money upon the education and the maintenance of their children, to have to pay additional rates and taxes. I think that there is a great deal to be said for increasing substantially the amount of the allowance for incomes under £500. I have no defence for the comparative smallness of the increase this year, except that the Exchequer could not afford to give a larger allowance. But I hope that some Chancellor of the Exchequer soon will be able to give a greater allowance than I could afford to submit to the House of Commons this year. I hope that when that time comes the House of Commons will take the view that the direction in which such allowance should be made is by increasing the amount in the case of small incomes before you come to the extension of the limit. For that reason I cannot see my way to accept the Amendment of the hon. Gentleman.

I beg to support the Amendment. I have been in India, and I know how hard it is for Indian Civil servants to pay all these taxes. I am for helping the man who has under £500 a year, but I do not see why relief cannot be given in both cases We are getting a lot of money now for rates and taxes, and there is no reason why the Chancellor of the Exchequer should not accept this Amendment.

This is a perfectly nonsensical Amendment. The amount of relief which is proposed to give to these people from India is 15s. on incomes of £1,000, and to say that an official from India cannot educate his child because he does not get relief to the extent of 15s., is perfectly ludicrous, and the hon. Member knows it.

Though I do not at all accept the views of the hon. Baronet, still this proposition is not one which seems to command support, and I do not think that I should be justified in asking the House to divide upon it.

I beg to propose at the end of the Clause to add the words,

"and as respects that year, and any subsequent year, twelve pounds shall be substituted for eight pounds in Subsection (2) of the said Section as the annual value limit for houses to which that Section is applied."

This is an Amendment which I have promised, to increase the limit of abatement in respect of the repairs and the maintenance of cottages from £8 to £12. That means £12 exclusive of taxes. The £8 would represent the rent of a cottage at 3s. a week, or 4s. a week including rates, and this will mean the rent of a cottage of 4s. 6d. exclusive of rates, and 6s. including rates. That more than covers the cottages in the country. It covers the great bulk of artisans' dwellings in towns as well. I agree that there is a great deal to be said for the extension all round to £15 which I did consider, but a £15 cottage is outside the kind of dwelling-house occupied by the industrial population of the villages. The £15 house in a village is rather a swagger kind as a rule.

dissented.

In Wiltshire they are rather a higher cut altogether. Down there I suppose that they have more sumptuous dwellings. But taking the country as a whole, the £15 house is a very good house. In the towns I agree that it is a rather different proposition. I should like first to see the experiment tried of increasing from £8 to £12, which is a considerable advance upon the old limit, and the Inland Revenue authorities would like to see that experiment tried before going beyond it. We should like this 50 per cent. advance on the limit first made, and then we will consider two questions: first, the extension of the limit, and then the extension of the flat rate. What I should be rather afraid of is that the bad landlord would do just as well as the good landlord, if you increase the flat rate. But in regard to the other point, there are artisans' dwellings undoubtedly whose rents are above 6s. a week, but 6s. a week would cover the vast majority of these houses. There might be some sort of scale which would discriminate between the town and the country, but I would like time to consider the matter before coming to a conclusion on the subject. I would appeal to the House for the moment to allow us to experiment with this 50 per cent. advance. The two questions which we have to consider afterwards are the increasing of the rating limits, and the raising of the limit of the flat rate. These two things I wish to consider before coming to any conclusion. Therefore I ask the House to accept this proposal for the time being with a view to looking into these two points.

I wish to acknowledge the very reasonable manner in which the Chancellor of the Exchequer has endeavoured to meet our point with regard to the limits in respect of the amount allowed to be abated under the head of repairs, maintenance, insurance, and management, and for my part I will not at all complain if the Chancellor of the Exchequer desires some experimental system during the coming year before adopting, as I think he will have to adopt, a somewhat higher limit. I cannot see any logic in this flat rate. As the Chancellor of the Exchequer says, it puts a premium on negligent landlords, and it becomes wholly impossible for us logically to present our case, as we shall continue to present it, in favour of assessment under Schedule D, if the flat rate limit continues to be part of the Government scheme. I am inclined to think, although the Chancellor says that 4s. or 4s. 6d. would represent, and possibly more than represent in his view the rent on an economic basis of a cottage in the agricultural area—

Without rates.

I am inclined to think that when the Government take to building houses themselves in rural districts, as well as in urban districts, they will find it very difficult, if they have not fully allowed for repairs and outgoings generally, and if they mean to base their scheme on an economic rent with a corresponding wage to the agricultural labourer, to keep the rent down to 4s. or 4s. 6d. In any case where is the logic of the distinction between the urban cottage and the rural cottage? Assuming that the owner of the cottage is entitled, as I suggest he is entitled, to be allowed everything that he expends in order to maintain the rent of the cottage, on the analogy of a man of business who is assessed under Schedule D, it must be equally fair in the case of the urban cottage, as in the case of the rural cottage, that the true economic value should be taken as the basis. I would suggest, if you cease to make any distinction between the two, as I think you will find it absolutely necessary, that the limit of £12 is not sufficient for this purpose. When I appeared to differ from the right hon. Gentleman just now I was not thinking of Wiltshire, I was thinking of the semi-industrial area of Gloucestershire in which I live, and also of the conditions prevailing in South Wales, with which I am only too painfully familiar.

It is a rural district.

I am not talking of rural districts. You cannot logically differentiate in this matter between rural districts and semi-industrial or industrial districts. It is necessary in order to maintain the rent to expend a certain amount upon repairs and maintenance of the cottage, and that is the amount which ought in fairness to be allowed to the owner of the cottage, whether it is urban or whether it is rural. My experience as to the cost of building in a semi-industrial district—and this, of course, does not apply to South Wales, which is more wholly industrial—is that it has gone up by at least 30 per cent. during the last five years. If I may give a personal illustration, I find that I cannot myself build cottages which will satisfy the requirements of miners in my district to-day at less than £300 apiece. Of course, no doubt I could, if I built them in a long and uninteresting row, which is a thing I very much deprecate; but if you have single cottages or semi-detached cottages, the kind of cottage that has at least three bedrooms, which the miner is now demanding, and is quite properly demanding—[An HON. MEMBER: "What about the price of the land?"]—I am not saying anything about the price of the land, and, if I include that, the figure would be still higher—if you have single or semidetached cottages, with three bedrooms, cottages of a kind which will satisfy the mining population, having suitable sanitary outbuildings, a garden, bath, and other luxurious requisites which are coming to be necessities with that class, I say I find it extremely difficult to limit the allowance to £12.

I am not at all sure whether £15 is not a very modest allowance in such cases. I have, after carefully considering the matter, put an Amendment on the Paper suggesting £18, but by way of compromise, and arising out of my own personal experience in a partially rural and semi-industrial district, it occurred to me that £15 was a figure which the right hon. Gentleman might consider. It is not only the high cost of building at the present time which has to be considered; there is also the increased demand as to standard on the part of the local authorities, and there is the demand—in the industrial districts at any rate—for a much better type of cottage, costing a much higher figure than was contemplated when the Act of 1894 was passed. I do not want to press this too far, because I realise that the right hon. Gentleman has not only made some concession, but he has adumbrated further concessions after further examination and experience. I believe the true test of this matter is the test which is applied in commercial circles for the purpose of assessment under Schedule D, in regard to the amount that has necessarily to be expended in order to maintain income, and, if it is found to be reasonably necessary to expend a certain amount of money for the maintenance and repair of cottage property beyond the suggested limit in order to maintain income derived from that property, surely, in fairness, that is the allowance that ought to be made. I think we have a reasonable and logical case for asking for a further extension of the limit; but whilst accepting the endeavour on the part of the Chancellor to meet our view, I think he will act illogically if he differentiates between one class of cottagers and another, and I venture to hope that, bearing that in mind he will see fit to stretch this £12 to the sum of £15, and so effect a compromise, which I think will give satisfaction in every part of the House.

The Chancellor of the Exchequer has not seen fit to extend the £12 to the amount of £15, which is the amount I have suggested in an Amendment that I have put down, but which I do not propose to move, because I fully sympathise with his feelings and views that he wants to gain more experience in regard to the limit which should be fixed. So far as that is concerned, I certainly think that we could have a very much better system than the flat rate. In regard to urban houses, it is perfectly true that, so far as ordinary rural districts are concerned, the £12 limit will probably meet the great bulk of cases; but when you come to the urban district, like my own Constituency, 7s. a week is by no means a high rent for a relatively small cottage, not by any manner of means; and you will get cottage rents running up to 8s. and 9s. a week. If you take London it will probably require special treatment compared with other towns. Undoubtedly what the hon. Gentleman opposite said is quite true, namely, that the price of building has gone up by 25 per cent. to 30 per cent. in a very short number of years. That is one of the difficulties which faces everyone who have any responsibility connected with providing houses in urban or rural districts. I think £300, the figure named by the hon. Gentleman opposite, is very high. I know that very good cottages have been erected by a company with which I am concerned in South Wales, for about £225 each. They fulfil all reasonable requirements, and they have three bedrooms. I know that the price of cottages depends very largely on the locality where they are built, and on the facilities for obtaining material and labour. Undoubtedly there has been so much said recently on the subject of rural housing that urban housing in places like South Wales has been rather overlooked.

I regret that we have not made a little more progress, and undoubtedly we should encourage people to build bigger and better cottages. The limit of 6s. would prevent the building of larger cottages, without penalising by way of taxation those who build cottages that will accommodate large families. I sincerely hope that the Chancellor of the Exchequer before he deals with the next Budget, will go more fully into this question, and that we shall not be limited even by £15, but that we shall get to a limit which would really meet the requirements of the better class artisan, or even the better class clerk. We are only asking for exemption from Income Tax of the cost of repairs, maintenance, and management, in the same way as other businesses and questions of property are dealt with under Schedule D. What we want is that people may provide better housing accommodation without being penalised by taxation, for the two together seem to be rather an illogical proposition. I do not know whether the Committee which is now sitting could not take into its purview the question of doing away with the present artificial definition, and instead of dealing with the subject in this piecemeal manner—so many shillings a week—deal with it in a way which would really encourage the building of better housing accommodation, for that would be a substantial advantage to all who have responsibility in providing decent accommodation for workpeople at something like an economic rent.

I would urge the Government, on the same lines as those followed by the two previous speakers, that they should not differentiate in favour of rural as against urban cottages. I think a very strong argument, which has not hitherto been mentioned, is provided by the Census Returns. If the right hon. Gentleman will give them his attention, he will bear me out when I say that the Census Returns show that the increase in the adequacy of the supply of cottages is far lower in the urban district than in the rural. I do not want in any way to suggest that there is not a great deficiency in many rural districts, but in the last ten years the inadequacy has been much greater in the urban districts than in the rural districts. That is a strong reason why the figure, if it is necessary to fix a limit at all, should be such as to include the ordinary artisan dwelling. Without appearing to look a gift-horse in the mouth—because I am one of those who for a long time have been urging the Government to do something in respect of relief under Schedule A—I do want to protest against this method of meeting an admitted grievance, From year to year, as the Chancellor has admitted, and as the country as a whole admits, the Schedule A Income Tax payer has a substantial grievance, but the methods which have been employed are only a series of palliatives, each one of which is a further admission of the grievance which exists. I would point out that the Government themselves since 1909 have enormously aggravated the grievance of the Schedule A Income Tax payer by the imposition of the Super-tax. The imposition of the Super-tax has extended the effect arising from the amount being assessed upon the gross income, which is very different from the net income, to far beyond the actual sums involved. There is a case within my own knowledge in which the difference between the net and gross income, between the assessment and the net income for Schedule A purposes, brought the owner of the property into the Super-tax limit, and this made a difference to him out of all proportion to the amount of property upon which the tax was imposed.

I would suggest that it would be more convenient to the Government themselves and to their officials who have to administer the Income Tax and the Finance Act, that the original assessment on rural property to Income Tax should be the same figure as that upon which the final payment is intended to be made. Section 69 of the Finance Act of 1910 and this Clause which is proposed are both intended to have the effect that in certain classes of property the assessment and the actual payment of Income Tax on that property should be on the net income rather than on the gross assessment. Yet the payment of Income Tax has to be on the gross assessment itself. A very elaborate process has to be gone through in order that the Schedule A Income Tax payer may recover as much as he is entitled to under Form 99, and in many cases the Super-tax returns must necessarily be hung up, or have to be revised, long after the period, simply in order that the claim upon Form 99 may be received. I maintain that it would be infinitely better and cheaper in every way for the Treasury as well as for the individual if the Government would go to the root of this grievance and deal with it by practically giving the option of assessment under Schedule D, instead of Schedule A, rather than by dealing out palliatives, giving an exemption of £8 one year and £12 this year, and probably £15 or £18 next year. There is an analogous case in existence now. Schedule B Income Tax payers have already the option of being assessed under Schedule D. I have never heard that that has caused any inconvenience whatever to the Income Tax officials or to the individuals who are subject to the assessment. I do not know that a great many have taken advantage of it. I believe, if they would allow owners of real property the right to claim to be assessed originally under Schedule D, instead of Schedule A, although the Treasury might and would lose a certain amount of Income Tax, yet they would gain enormously in convenience and in many other ways.

I think we ought to try to understand in the interest of property owners what is really being conceded by this Clause. We are, as I understand, extending the limit which is in operation under Section 69 of the Act of 1910 with regard to the amount that is allowed for repairs from an £8 house to a £12 house. Under the existing law one-eighth is allowed upon land, and one-sixth upon houses under £8. We understand, according to this Amendment, that that is now extended to £12, and the limit of one-sixth, so far as houses are concerned, is to be abolished under this new Clause. By that provision any property owner with property under £12, in either rural or urban districts, will be able now to obtain a deduction from his Income Tax on the actual amount he has expended upon his property. There is no limit up to the £12. I think that is a very great concession, but, unfortunately, I am afraid, from the discussion which has taken place, that property owners do not understand that concession, because the Income Tax collector docs not explain to them what powers they have. The concession is made by what we regard as law by reference, which will make the matter more complicated than it has been, and what I would suggest is that there should be a circular sent out from the Inland Revenue instructing the Income Tax collectors as to the limits now in operation.

I believe that this concession will be a great relief to good landlords, to the men who repair their property and keep it in a proper state of efficiency, and I am quite certain that they will appreciate the extension from £8 to £12 and the abolition of the one-sixth limit. I should like to call the attention of the Secretary to the Treasury to another grievance which property owners suffer from and to which my attention has been called. I think it is a serious grievance. Formerly an owner was allowed, without regard to limit, to make full deduction of the balance of rent owing by a tenant when he left the property. Thus, if a tenant left owing £5, or £10, or £20 of rent, until two or three years ago the owner of the property concerned was allowed to deduct in full from the Income Tax the amount which was owing, because he had really paid Income Tax upon the rent. Now he is only allowed to deduct two-thirds of the £5, or £10, or £20 due by the tenant when he goes away. That is considered to be a serious grievance, especially on the part of small property owners who are small Income Tax payers. The rent may be carried over for three or four years, and the owners have been paying Income Tax in full upon the value of the property, while they are now allowed only the two-thirds—

That is quite a different subject from the one dealt with in the Clause. We are now only concerned with the question of allowance for repairs.

I quite agree, but it is really part of the subject of grievances of small property owners, and I thought I might refer to the matter. I quite admit I should have done so on Clause 2. I do hope that this other change will be notified by circular from the Inland Revenue Department, and as to the grievance which I have just mentioned, I hope the Secretary to the Treasury will be able to do something to rectify it.

I am sure the House will agree with the Chancellor of the Exchequer's general statement that it is desirable to increase this allowance, although I for one should have strongly urged to do so to £15 now, on the grounds which were stated by my hon. Friend the Member for Wiltshire (Mr. C. Bathurst). I should not personally desire to divide the House on the question, and I do not think my hon. Friend wishes to do so. We quite recognise that this is a concession, and that the Department may wish to feel their way, but I do think that it might be generally agreed that £15 is not too high a limit even now, especially in urban districts where such a house is really no more than the average house occupied by the artisan at present rents. It is very hard on small property owners who try to improve their property and keep it up-to- date and make it really fit for habitation by the working classes not to get full allowance for that in the Income Tax. There was a hardship when the Income Tax was 6d. or 9d., but it is much greater now when the Income Tax is so much higher. There seems to me to be a fatal objection to a flat rate, and to extending the flat rate. The flat rate must, I think, be a minimum. If you are going to give a flat rate you must make it as low as anybody can possibly be expected to spend on the maintenance of his property. The moment you do more and extend your flat rate beyond the minimum, you are giving the same allowance to the man who neglects his property as you do to the man who keeps it in good and habitable repair. That is a position you cannot escape from, 7 quoted figures recently, giving chapter and verse, and I can show them to the Chancellor if he desires, stating the actual cost of maintenance and repair of certain blocks of small property in towns. That showed that the owner at the present rate of Income Tax was really paying an Income Tax of 3s. 6d. in the £ upon the actual income which he received from the property, and that the allowance he received fell so far short of the actual expenditure that on the actual residue he was paying 3s. 6d. in the £. The houses in that case were let at a rent of 7s. 6d. per week, which would just about be covered by the £15 limit suggested.

8.0 P.M.

Another point is that the extension of the limit would have some tendency to keep down rents. There is no doubt that there is a tendency in the case of urban houses for rents to rise in the present congestion of building. The way that small urban house property rents are rising in many large towns is very remarkable. I think it would be in the interest of the tenants of the houses to raise the limit of allowance to £15. The owner in that case would hesitate to raise the rent above the £15 limit, because that would immediately deprive him of his allowance for expenditure upon maintenance and repairs. The Chancellor of the Exchequer said that he thought there might be some way of drawing a distinction between urban and rural houses. I do not believe it is possible, and I do not think it is desirable, for this reason: What I look forward to, and what I hope will be the tendency of building, as communications constantly and steadily improve, is that because a man works in the town there is no longer any necessity for him to live in the town. I believe in as much light and air as possible, and, where it is possible, for every working man to have a little bit of ground available on which he may have a garden, which is one of the most desirable things. I cannot see because a man works in a town why he should not be able to get a house at a small and reasonable rent, not only with brick walls, but also a little plot on which he could grow something for himself and his family. That being so, I am sure that both owners of land and this House ought to do everything possible to encourage that tendency. If that comes about, it must tend constantly to obscure the dividing line between urban and rural districts. Any kind of legislation which attempts to draw a hard and fast line between what is urban and what is rural will be mischievous from that point of view. We want both to enable the town worker to get out into the country where he can get a garden and also to encourage rural industries, so that people in purely rural districts may not be wholly confined to one form of getting a living.

I entirely agree with the hon. Member opposite (Mr. J. Samuel) that it is very desirable that owners who are entitled to this relief should have some official intimation of their right to obtain it. I think that would best be done by a notice on the demand note. It is a common practice of the Department to attach a small slip of paper to the demand note notifying the Income Tax payer that he is entitled to make a claim for certain relief; it is then the fault of the owner if he does not apply. Such a notification is particularly necessary in the case of a small owner. The man with a large amount of house property has professional advisers, who will see that every penny to which he is entitled is claimed. But the small owner, who cannot afford professional advisers, may not have the knowledge enabling him to claim the relief to which he is entitled. I very much regret that the £15 limit is not adopted at once. I do not think there is any valid reason against it, in view of the present high rate of interest and the rents of small urban house property. I entirely accept the statement that the £12 limit will meet the rural case, but the justice of the claim is by no means confined to rural districts. Urban authorities very properly have to be more particular than rural authorities, because anything insanitary in a town is a far greater danger to the public than where the houses are isolated. Consequently, the requirements are very properly more onerous and insistent than in the rural districts. Moreover, as the right hon. Member for Swansea (Sir A. Mond) very properly pointed out, the cost of repairs in urban districts is extremely heavy. But, after the Chancellor of the Exchequer's statement, I am afraid we must accept the £12. It will, however, only touch the fringe of the urban case. It is true that we have the frank admission that this is an experiment which must be extended. We must, therefore, accept the concession with a good grace. I would express my thanks for what the right hon. Gentleman is prepared to do, and my deep regret that he cannot see his way to extend it to £15 at once.

As the hon. Gentleman says, the £12 meets the rural case, and I suggest that it would be better to defer the question of the urban case for a little longer while we examine the figures of particular instances. It is very difficult to say for certain whether £15 or £18 is the right figure. It is worth investigating, anyhow, whether the flat rate could not be extended as between £12 and £20, rather than treat the houses between £12 and £20 in exactly the same way as we treat those under £12. I will carefully consider the suggestion to attach a notice to the demand note, and, unless there are difficulties of which I am not at present aware, I will see that it is done.

Before the question is put, may I make a plea for a possible compromise? It is admitted that £12 is satisfactory for rural property. Could not the Government concede £15 for urban property? The expenditure on urban property of this description is rapidly growing. Wages and the cost of materials have gone up. The requirements of local authorities are much greater and more difficult to cope with. Therefore, there is a most substantial case for making this concession. If you are going to make the experiment, why not differentiate between the two at once? If the Chancellor of the Exchequer were here, I do not think that he would be so stony-hearted. I hope that, even at the last moment, this differentiation can be made.

I beg to move, in Subsection (1) to leave out the words "commencement of," and to insert instead thereof the words "sixth day of May in."

When this Clause was in Committee the question was raised whether it was really necessary to insist that the latest date for making the demand for separate assessment should be the beginning of the Income Tax year. The suggestion was made that it might be possible to allow claims to be made a month later than that. I promised to have the matter considered. It has been considered carefully, and I am glad to say that it seems possible to meet that suggestion, not indeed by saying a month after the notice has been given, but by moving the date on a month, and making it the 6th May instead of the 6th April. I hope the House will agree that that is an improvement. It can be allowed without prejudice to the practical working of the scheme, and we are very glad to make it in the general interest.

I beg to move, as an Amendment to the proposed Amendment, to leave out the word "May," and insert instead thereof the word "June."

This Amendment is a concession made in response to a fairly long discussion, and it is one which I am sure those who took part in the discussion will appreciate. But I would point out that the extension of the date by one month will make all the difference in the world to the actual effectiveness of the Amendment. Under the Clause married people have the right to appeal for a separate assessment. They have to make a fresh appeal each year. The Chancellor of the Exchequer proposes that they shall make that appeal by the 6th May—that is, one month after the beginning of the Income Tax year. I suggest that the 6th June would be a better date, for this reason. I have never heard of anybody saying to himself on the 6th April, "This is the beginning of the Income Tax year; therefore, I must begin to think about my abatements, my life insurance, and number of my children, and so on." What everybody does, and what I believe the Inland Revenue expects us to do, is to wait until we receive our form of return—I think that is what the large document which we receive is called—and then to consider our payments and abatements. It seems to me fair and reasonable that in the same way married women who make this claim should be allowed to make it after they have received their form of return. The date that the Chancellor of the Exchequer has chosen is 6th May, which comes in the very thick of the time when these forms of return are being sent out—in fact, most of them are sent out rather later. The result will be that a certain number of married women will make the claims to which they are entitled, and the majority of them will find that they have made their claims just two days, or a week, or perhaps three weeks, late.

I think it will be very inconvenient if this concession, which the whole House approves of, should be so given that married women who wish to claim under it—in the comparatively few cases where they will do so—find that in practice that their right is whittled away, and that they are tripped up by the difference of a few days in the day. That is why I propose 6th June. At that time these forms of return will have been sent out. The Attorney-General mentioned the question of the difficulties of administration. I am fairly certain that no difficulties of administration would arise by extending the date one month. None of the assessments are made until, at any rate, the middle of July, and most of them are not made until September. In places like the City of London they are not made until October. Therefore, from the point of view of the Inland Revenue, 6th June is a time when most of the assessors and surveyors of taxes would have at the least a period of six weeks—in most cases a period of three and a half months—to prepare these separate assessments for married women. I think, therefore, that this is a reasonable extension which will not create any administrative difficulties which are not present in the Amendment as it already stands.

It is a very natural thing for the hon. Member to seek to extend the month which the advisers of the Government say is what is most consistent with administrative convenience to the two months which the hon. Member suggests will be consistent with administrative convenience. In this matter one munst have some regard to the reasoned advice which is offered by those who have actually the duty of administrating the Act. I might give my hon. Friend one example of the difficulties which will arise if you postpone the date too long, and I give it with the more assurance because it does not appear to have occurred to him. Supposing we test the matter in this way: Let us assume that the hon. Member's rights are not exercised until the last day. If on the last day it should occur to him, being the 6th of June, to claim for a separate assessment, the claim may be made by either the husband or the wife, not necessarily by both. Say it is made by the husband on the 6th of June. That would be the first moment that the revenue would know that they will have to seek for a separate return from the other party. The other party will be entitled to the full allowance of time which the law gives. The hon. Member will see that that illustration at once carries him to the month of July. As he very accurately says, some assessments are made in the month of July. But assessments are not made in five minutes. It may be that a certain amount of inquiry has to take place. The wife may deny that she has an income, and so may the husband, although the revenue authorities are certain that one or the other, or both, have the income. There is thus a perfectly good reason why the concession should be limited to one month—which I would remind the hon. Member was what was asked by those who urged the matter upon the Government in Debate the other clay. That, of course, does not in the least rule out my hon. Friend from making a further suggestion. It hardly, I think, justifies the view that the proposal now made commends itself to many people who want to make this provision a reality and not a sham. For these reasons, though I am very sorry to have to refuse the request of my hon Friend, I must do so, and I am acting on the very best advice that I can get.

I beg to move, in Subsection (1), paragraph (b), after the word "married" ["shall also apply as if they were not married"], to insert the words

"and a claim under Section five of the Finance Act, 1897 (which relates to the exemption of the income of a married woman in certain cases), may be made by the wife as well as by the husband."

This Amendment must be read by the House in conjunction with the two Amendments that follow, all three of which are down in the name of my right hon. Friend. These three Amendments are put down in order that we may fulfil several promises which I gave the other day in Committee. I not only promised to look into the matter which we have just disposed of, but to see whether it was possible to amend the married women's Clause in such a way as not to put people to the choice of either enjoying the provisions of Section 5 of the Finance Act of 1897 or of enjoying the benefits of the new Clause, but to see whether we could not devise a scheme by which, in proper cases, they could enjoy the benefit of both. The House will perhaps remember what the benefit of Section 5 of the Finance Act of 1897 is. Supposing you have a husband and a wife who between them have a total income of not more than £500 a year: supposing, moreover, that a portion of that income, say as to £100, is earned by the wife; then, however you make up the balance in that case, the Act of 1897 permits an application to be made by the husband to have a separate assessment in this sense—that the income which his wife earns is to be assessed separately and entitled to abatement or exemption according to this amount, exactly as though it were not combined with any other income, and the rest of the income, the £400 that I have used as an illustration, is again to be assessed separately, and is to enjoy the exemption or abatement, as the case may be. Under the provisions of the Act of 1897 hon. Members will see that only two conditions need to be specified to enjoy the exemption. One is that the total income should not be more than £500, and the other is that the wife should earn some of it. It is not so easy to combine that with our new Clause, which allows the husband and wife to claim that there should be separate assessments, and the difficulty arises for this reason, that the right exercised under the new Clause of division between the incomes is not between the income the wife earns and the rest of the income, but is the income belonging to the wife, earned or unearned, and the income belonging to the husband, earned or unearned. I confess I thought it was not possible to combine the two. I saw that the hon. Member for St. Pancras (Mr. Cassel) held another opinion, and though he did not suggest at the moment how it could be done, his belief in fitting the two things together was well warranted. I hope he will agree that the proposals we make will fit them together. It is necessary to do three things which are done in these Amendments. The one which you put from the Chair, Mr. Deputy-Speaker, has this effect: Supposing Section 5 of the Finance Act of 1897 is going to be taken advantage of instead of its being taken advantage of by the husband claiming that the wife's earned increment should be separately assessed, the wife may claim that her earned income may be assessed. So far this removes what some people may call a sentimental grievance, because it makes no difference in pounds, shillings and pence, but it puts her in a position in which she would be under our Clause and enables her to claim in her own name what, under the Act of 1897, should be claimed by the husband. In the second Amendment we require, in line 14, the necessary exemption which hon. Members will find printed on the Paper, because under Sub-section (c) of our Clause the income of the husband and wife is to be treated as one. The object of that provision is to prevent the subdivision of the joint income resulting in exemption or abatement being claimed twice—by one in respect of one-half of the income and by the other in respect of the other half. Under the Act of 1897 you did allow exemption and abatement in respect of both halves, and we introduce that exception under Sub-section (c). The third Amendment is on line 25, and the reason for that is that our new Clause provides that in the event of sub-division being applied for—the sub-division is between the income of the wife on the one hand, and the husband on the other—whereas that is not the way the line is drawn under the Act of 1897, consequently it is necessary here to provide, when that expression comes in, for the provision of the abatement in proportion to the earned income, as this abatement is specifically given in respect of the wife's income, which seems on the whole the right idea, in respect of earned income, and the result of it is that everybody who could have previously taken advantage of the Act of 1897 will still be able to do so. That will not affect their rights under the existing law, because the wife will be able to claim in her husband's name, and at the same time we manage to reconcile these two statutory provisions so that they fit together, and I hope hon. Members will feel that these three Amendments, regarded as part of the whole, do really adequately meet the rather difficult case which was pressed upon us during these discussions.

I think that the three Amendments which the right hon. Gentleman has referred to are a great improvement on the Clause and meet a real grievance which would have existed without them, because under the Clause, where the joint income is under £500, it would have deprived the husband or wife of availing of the benefits of this Section or the benefits they would otherwise receive under the Act of 1897. I agree with the right hon. Gentleman it was an extremely difficult matter to draft words that would so amend the Clause as to remedy that grievance. I think the right hon. Gentleman has skilfully succeeded in doing so, and I am grateful for the trouble he has taken.

I think the right hon. and learned Gentleman has skilfully succeeded in completely fogging my mind by taking these three Amendments together. The first one is easy to understand, but on the last two I am hopelessly at sea.

I beg to move, in paragraph (c), after the word "income" ["which depends wholly or partially on total income"], to insert the words "(except so far as otherwise required for the purpose of dealing with any claim for exemption, relief or abatement under Section five of the Finance Act, 1897)."

I do not want to repeat myself, but, as the hon. Baronet tells me that I have "produced confusion," perhaps I may say a few words. Will the hon. Baronet follow for a moment, and I think it will become quite clear? Under Sub-section (3) the income of the husband and the wife shall be treated as one in estimating the amount to be paid or allowed I will give an illustration which the hon. Baronet can follow. So far as this new Clause is concerned they were entitled, husband and wife, to be separately assessed. That does not mean if the total income is £320, £160 of which belongs to one and £160 to the other, that the result of the Clause would be that no Income Tax is paid by either, because they cannot each say that the first £160 is not to be taxed. But we must except from that general rule the case we are now bringing in, because under tht Act of 1897 it is the fact that you allow separate exemption to be claimed by each of the two parties without lumping them together. That is the reason why we are moving to insert in brackets the words of this Amendment.

I beg to move, paragraph (d), after the word "income" ["in respect of earned income"], to insert the words

"(including any exemption, relief, or abatement given in respect of the profits of a wife from a business in pursuance of Section five of the Finance Act, 1897)."

I beg to move to leave out Sub-section (3).

I quite agree that some of the later Amendments down in the name of the Chancellor of the Exchequer if inserted, will mean that this Sub-section will be improved because it is now proposed, not to empower the Commissioners to levy a distress upon the wife's goods for the husband's tax. That is to be done away with. But you still leave the power to levy a distress upon the husband's goods for what is now the wife's tax. Under the existing law, apart from this claim under the Section, the husband was liable for the whole of the tax. He included his wife's income in his return and he was liable to have his goods distrained upon. Now you have a different position. An assessment is made upon the wife. The husband has no power of disputing the returns. She may accept a return which he would consider to be too high, she may not pursue her right to which she is entitled in disputing that assessment, and the amount of the tax is fixed under the present procedure upon the wife and the husband. I venture to say there is no case under the law at present in which the husband can be made liable for the liability of the wife where the husband has not got the opportunity of disputing that liability. Here you are going to make him liable without any power of disputing the liability. You do not even make it necessary as a condition that you should levy the distress on the wife's goods. The Commissioners, although they may know that there are goods belonging to the wife, may levy the distress on the husband's goods without any demand and without any opportunity of the husband disputing the claim. I do not suppose that the Inland Revenue Commissioners would exercise their powers to this extent, but Parliament is responsible for what it puts in an Act of Parliament, and on these grounds I think this Sub-section ought to be omitted.

I regret that I cannot accept the proposal made by the hon. and learned Member opposite to omit Subsection (3). No doubt that Sub-section, as we propose to amend it, will leave the possibility of the husband's goods being-seized in order to pay his wife's tax, but if the hon. and learned Gentleman will consider the practical side of this matter, he will see that it really is impossible as the result of permitting this separation between the wife's assessment and the husband's assessment, to leave the Inland Revenue Commissioners in the position that unless they are able to decide which goods are the husband's and which are the wife's, they shall be exposed to any number of interpleader actions. Our proposal does not involve any grievance of certain married women. This is the case in which the husband's furniture is taken to pay for his wife's tax. Although the hon. and learned Gentleman opposite said there was no precise analogy there are plenty of cases where husbands have to be answerable for some of their wife's liabilities. Many people think the law in this respect is unduly harsh on the man because the husband is answerable in damages for tort which his wife commits. A husband is liable if his wife libels somebody or assaults somebody, or commits some other wrong entirely against his instruction, or in spite of the announcement that he repudiates all responsibility. Even under those circumstances the responsibility attaches to him just the same. A husband is responsible for his wife's contractual debts, or for that large proportion of them which are regarded as providing a wife with necessaries.

There is no such corresponding liability on the wife in regard to the husband's contractual debts. A wife has not to pay for damages in a libel action against her husband, and she is not responsible for her husband's tailor's bills. Therefore, if there is to be any distinction drawn, the hardship in these cases is on the side of the husband and not on the side of the wife. If this hardship is to be corrected the Government cannot begin when engaged in collecting the revenue. As far as the revenue is concerned, it must be collected, and in view of the fact that this is the existing law and has been ever since the Income Tax started, and you might in the last resort seize goods belonging to a husband to collect the Income Tax which is due from any portion of the income of the home whether it is the income of the husband or the wife, we do not feel able to depart from that practice. But in order that nobody should say that a Clause which is designed to right certain wrongs under which married women suffer should deliver a backhanded blow at the expense of married women, we propose to make it where husband and wife are separately assessed that we should not seize the married woman's goods to pay her husband's taxes. Somebody must be answerable for the taxes of the common home and since it is impossible for the Inland Revenue to find out which wedding presents belong to the husband and which to the wife, it is necessary to stick to a machinery which has been working ever since the Income Tax started and call upon the husband to pay the tax. It is not a case which often arises.

I agree that this Clause as proposed to be altered will not leave a woman's grievance, but it will create a mail's grievance. As the Attorney-General has stated, a man stands already in a position very much less favourable with regard to his wife's debts than the wife stands in regard to her husband's debts. There is no question in this Amendment of correcting that inequality. The point is that the Government are going to extend it and create anew disadvantage. Whatever the liability of the husband is, at all events he is not liable for his wife's debts incurred in respect of her separate property. Now you are going to make the husband responsible, so far as his goods go, for debts of that character, and you are going to do it in an extremely unfair way. Because ex hypothesi the wife has income in respect of which she is liable to Income Tax. If proper notice is given, the assessment to Income Tax is going to be sent to her and the husband may never see it. She may object or not, but at all events she will be assessed. The demand for the tax is going to be sent to her and not to her husband; in fact, the husband may never see it. One fine day, without any notice or warning of any kind, the husband may find the Government officer in his house and his goods distrained upon for his wife's tax. This kind of thing is not only extremely unpleasant, but it is very injurious to a business man to have that kind of process in his house.

Unfortunately, wives and husbands do not always agree, and the wife may allow that kind of result to ensue. I do not think that is right, and I thought the Attorney-General would have accepted the principle of the Amendment which my hon. and learned Friend has put down on this Clause by which no distraint is to be levied on the man's goods until he has had notice and a demand for payment. That surely is a very moderate suggestion indeed, and I do not see how that proposal can be fairly resisted. The learned Gentleman says that the Government officers ought not to be expected to distinguish between the husband's and the wife's goods. That is all very well, but in the case in question the wife has an income, and why should they not go against her income rather than against the husband's goods and property? The difficulty as regards distinguishing arises every day. There are thousands of cases in which a man's goods are seized and somebody else intervenes. That is the kind of difficulty which is dealt with every day, and I do not think it ought to be raised as against the suggestion that in justice the husband ought not to have his goods seized for debt not incurred by him but by his wife, who for this purpose is made a separate person, and incurred by her in regard to her own separate property for which he is in no way liable. I think a strong case has been made out either for the omission of this Sub-section or, at all events, for the adoption of the Amendment of my hon. Friend as a proviso to the Section, so that at least a man may have a demand made upon him before he is subjected to the indignity and injury that may be caused him under this Clause.

I speak only as an ignorant layman seeking knowledge, but I want to ask the Attorney-General what would be the effect under this Sub-section if the husband had issued the ordinary statutory notice that he was not responsible for his wife's debts. Would that affect his liability under this Section, or would it not?

No.

In the second place, how would it operate in the case of a legal separation. If the husband and wife were legally separated, would the liability of the husband under this Section continue? Before we vote on this we ought to be quite clear as to those two matters, and when I speak as an ignorant layman I am sure there are plenty of others in the same position in the House.

I think we ought to have a reply to the questions raised by the hon. and learned Gentleman opposite (Mr. Cave), and the last speaker. It seems to me that the request put forward—that before you distrain on the goods and chattels of the husband, who may be quite an innocent party, he should, at all events, have notice—is a very reasonable one. Surely the Attorney-General will grant that without referring to the Chancellor of the Exchequer. It is purely a question of equity. I think we ought also to have some reply to the question how this Clause would operate in the case of a husband and wife living apart when they are legally separated. The Bill will soon proceed to its Third Beading, and we cannot go back on it again. I hope the Solicitor-General, therefore, will give the matter his consideration, and see whether there is time to put the Clause right in the way suggested by the hon. and learned Gentleman opposite

This is one of those well-known cases which to the layman often causes surprise. It is generally assumed that women in some way or other suffer an injustice from this House, but whenever we come to close quarters, we generally find that learned Gentlemen on both sides of the House get up and assure us that women have the advantage as against the male sex. That being so, I think we ought to be very careful about extending it. Even the champions of the female sex, as far as I know, do not go beyond pleading for equality. If there were equality in this case, it is very evident to me that a woman with personal property of her own would be as liable for the Income Tax of the husband as a man with his own separate property is liable for the Income Tax of his wife. It is all very well for the Law Officers to say that they are only extending a principle which exists now in law, but I am not quite sure that is a sufficient answer, because it is acknowledged now that the female sex have the advantage. The illustration about a man being liable for his wife's debts was given. This is purely a case of the Income Tax.

In many cases a hard-struggling man marries a wife with a considerable amount of property. Her income may be three or four times his income, but he is liable to pay her Income Tax, and she is not liable under any circumstances to pay his Income Tax. They say that is the present law. If the hon. and learned Gentleman is correct, they are extending this principle and therefore making it still more unequal. I should have thought, if that were so, there was all the more reason for this additional safeguard, of which the hon. Member for the Mansfield Division (Sir A. Markham) has spoken. I can conceive a case in which the husband and wife live under what are called modern advanced ideas. They decide, as far as money matters are concerned, to be totally independent. The modern husband says, "You can have the use of your own money, and I will not ask you to give any account how you spend it." I do not think that even my hon. Friend would say that he was justified in calling into question this justifiable reticence where they both have assured means. Women, however, are not always brought up in business habits, and when they get these notices they do not always file them or deal with them in the way that a man does in an office who has a cashier or a secretary. They do not always see the importance of them, and they may put them on one side because they have a pressing social invitation, and forget all about them. The consequences do not fall upon the woman, but upon the man. I think there should be some kind of demand made upon him before distraint is levied upon his goods, and I hope we shall receive some answer from the Front Bench on the points properly put by the hon. and learned Gentleman opposite.

I think a few moments will enable me to deal satisfactorily with the points raised by the hon. Member for Sheffield (Mr. J. Hope). It is quite plain that you will not be able to get any escape from the liability of the husband for the wife's tax unless the parties are living separately. No notice will get rid of that obligation. But if the parties are living separately, the Income Tax authorities at the present moment always regard the woman as a femme sole. Indeed, the liability of the husband for the wife's tax only arises when the woman is living with her husband. If they are living apart and properly separated, there is no trouble.

Must they be judicially separated?

I do not think that is necessary.

If this Clause stands as it is, would it not have the effect of abrogating that rule?

No, all this does is to apply certain existing provisions of the Income Tax Acts, so as to alter the right of the wife and of the husband in particular respects. There is nothing further. That at any rate is our view. For the rest there is an Amendment later on proposed by the hon. Member for St. Pancras, to Clause, 9, and I think it will meet some of the objections raised if we accept a modification of that Amendment. The modification that we would be prepared to accept would be in these terms:—

"Provided that no distraint shall be so made on the goods or chattels of the husband, unless a written demand for payment shall first have been made on the husband, or left at his usual place of residence, and he shall have failed to pay the amount of the tax payable by his wife within seven days' of such demand"

That enables notice to be given the husband in cases where harsh proceedings are to be taken. To that extent we can meet the hon. and learned Member. But we cannot go to the extent of relieving the husband of ultimate liability to pay the tax.

In view of the fact that the Government have made a substantial concession, I shall be prepared to withdraw my Amendment. But I wish to say that, personally, I do not regard it as going far enough. I accept it because I cannot get any more, but I still think it is a hardship that a husband shall be made liable in a case where he has no opportunity of disputing his liability.

There are two Amendments on the Paper which must be regarded together. They are down in the name of the Chancellor of the Exchequer. My explanation of them is this: As this Subsection was originally drafted, it provided that the Income Tax on a married woman's property, assuming she is to be treated separately from her husband, shall be recoverable on the goods of either the husband or wife, and the arrangement was mutual in this respect; the wife's goods were answerable for the husband's tax as well as her own, while the husband's goods were answerable for the wife's tax as well as his own. We propose to make a change in the Clause so as to make it run in this way. I will read Sub-section (3):—

"Where the Income Tax (including Super-tax) is charged on the profits or income of a married woman"—

We propose to leave out the next phrase, "whether in the name of the husband or separately"—

"in pursuance of this Section, the power to distrain in the case of non-payment of any Income Tax payable by the wife shall extend to the goods and chattels of the husband as well as the goods and chattels of the wife."

I think in that form it will be quite clear, as far as a married woman's own property is concerned, her property will in no circumstances be liable for anything other than her own tax, whereas, on the other hand, the husband's property will be liable, not only for his own tax, but for his wife's tax as well.

I now beg to move, at the end of the same Sub-section, to leave out the word "husband," in order to insert instead thereof the word "wife."

I raised a point on the Committee stage which I wish to raise again here. I put it to the learned Solicitor-General, that the law, as it stands at the present time, applies to the goods of the husband even when he is not living with his wife. I am fully aware of the circumstances under which separate assessments can be made if the husband and wife are living separately. But assuming that they are living together, and notice is given six months before the end of the financial year that they desire to be separately assessed, the assessments are made separately, and that subsequently they become separated, then this Section will at once operate, and the effect will be that the husband's goods will be liable to be seized under this Section, although he may have been separated from his wife for the rest of the year. I venture to submit to the hon. and learned Gentleman that he should put in some words which would do away with what would be an obvious injustice. I hope I have made my point clear. I am fully cognisant of the fact that at present, under this Sub-section, the husband and wife living together and giving notice six months before the end of the financial year that they wish to be separately assessed, there will be still power of distraint. But I want the Government to apply a remedy for an in- justice which certainly is not intended, by inserting some such words as I have suggested.

I quite realise the point put by the hon. and learned Gentleman, but I would suggest to him that there is some reason for another view. I would not be so dogmatic as to suggest that my view is the only possible view. The way in which I would put it to him is this: As things stand at present if the wife lives separately from her husband she is, as a matter of fact by Income Tax law, treated as a separate person. In many cases the authorities do not know she is married, and they treat her as a widow or as a single lady. It is undesirable that we should do anything to upset that, and I certainly should be unwilling to do it by a side wind. If you look at Clause 9 broadly, you will see it is obviously designed to deal with cases where, unless application is made in a given period the husband and wife who live together will be assessed as one. But if application is made then they will be assessed separately. If that is the groundwork of the Clause, the hon. and learned Gentleman will see that the view I am rather disposed to suggest to him is the right one after all, and that a Sub-section in the Clause will not really have the effect of making the husband, who is separated from his wife—because he would be assessed separately without any application—liable in his goods for his wife's debt. That is the other view I suggest to him. I shall be very glad to consider what the hon. and learned Gentleman said, but I assure him it was with that intention that the matter has been left as it is. We thought, as my hon. and learned Friend said just now, that this is a Clause which obviously proceeds on the assumption that you are dealing with a case of a husband and wife living together. If they each want a separate assessment, they must make an application, and if that is regarded as the substantial meaning of the Clause, none of these subsidiary matters would be thought to have other application. I can give the hon. and learned Gentleman the assurance that that is the view the Inland Revenue take. The present view of a married woman living separately from her husband is very largely a matter of practice. It is not easy to get it out of the actual words in an Act of Parliament. I am quite confident, if he will accept the assurance for what it is worth, that it is the intention to regard this Clause as confined to the husband and wife who live together and who claim to be assessed separately. If that be so, I suggest to him that to deal with the matter hastily might upset the law with regard to husband and wife living separate.

I desire to thank the right hon. Gentleman for his courtesy. I was assuming that the right hon. Gentleman was right, and I was dealing with the much narrower point where husband and wife are living together and claim to be assessed separately under this Clause, but that during the progress of the financial year they become separated. I hope he will bear that in mind.

I beg to move, at the end of Sub-section (3), to add the words,

"Provided that no distraint shall be so made on the goods and chattels of the husband unless a written demand for payment shall first have been made on the husband or left at his usual place of residence and he shall have failed to pay the amount of tax payable by his wife within seven days of such demand."

May I suggest that the words should read, "left for him at his usual place of residence"; otherwise a demand on the wife might be held to come within the Clause.

I agree.

I desire to ask a question as to the last few words. The hon. and learned Member for West St. Pancras (Mr. Cassel) proposed they should be "within twenty-one days of such demand." I should prefer that, but as he accepts the Amendment as a considerable concession, I can only express my satisfaction with the agreement. Should it not be made clear that the seven days is seven days after such demand? How it is delivered, one does not know. Is it not possible that the demand note may be a week-end in the post? Is it clear that there are to be seven clear days after the demand is left?

I think that is so.

I should like to ask whether the Government cannot alter the seven days. They might accept a longer time. Seven days may easily pass without the husband knowing anything about it. I should prefer the twenty-one days as suggested by the hon. and learned Member for West St. Pancras. I do not want to make meticulous objections, but I do not see the point of the Inland Revenue, so long as they get the money in the end, in objecting to a longer term than seven days.

We must assume before one has to take so extreme a course as seizing the goods of a husband to pay the Income Tax, that there has been a pretty considerable degree of negotiation or application, or altercation between the Inland Revenue on the one side, and the subject on the other.

With the wife?

With the wife, if you please. When you get to that point, I do not know whether the hon. Gentleman will think it reasonable, but every additional day you give to people makes it more likely that when you do come to seize the goods they will have disappeared. It is quite right that you should not, as the hon. and learned Member for Kingston (Mr. Cave) said, put a business man to the indignity, and it may be, actual commercial inconvenience and social disturbance of having a bailiff put in his house to seize his furniture when, by some conceivable accident, he may not even have heard that his wife has refrained from paying her tax. Once you have seen that he has got a notice you cannot give him more than this time, or you are not giving the revenue proper security against cases which do arise. You have to consider not only the case of an honest citizen but also the case of a dishonest citizen in which to give a great lapse of time means that any possibility of recovering the tax disappears.

I recognise the force of what the Attorney-General says, but I hope and believe that the Inland Revenue will exercise reasonable discretion in cases of this kind. I remember, when I was Chancellor of the Exchequer, a right hon. Gentleman, who was a respected Member on the other side of the House, but who is no longer with us, coming to me in fierce indignation, not because a bailiff had been put into his house, but because minatory notices had been issued to him at his usual place of residence, when he in fact was taking what I have no doubt was a much needed holiday or cure abroad, and letters had not been forwarded. He was a well-known Radical Member, but his indignation could not have been greater if he had been the most austere stickler for the rights of property that any of us has known within this Assembly. I think he said that, after all, he was not the kind of person who was likely to disappear, that he had paid his Income Tax and discharged his obligations as a citizen regularly, and that it was offensive and insulting to assume at once that he was nefariously defaulting, when a little inquiry would have shown that he was taking a holiday abroad in the ordinary course. That was an incident which arose through the too great zeal and too little discretion of some subordinate officer of the Inland Revenue. When it was brought to my attention the Inland Revenue and myself did what we could to heal the outraged feelings of the right hon. Gentleman. I hope the Inland Revenue will understand that when they have powers of this kind, they have to exercise them with discretion, according to the circumstances of the case.

Proposed words, as amended, there inserted in the Bill.

I beg to move, in Subsection (4), to leave out the words:—

"and Section five of the Finance Act, 1897 (which relates to the exemption of the income of a married woman in certain cases), shall not have effect in a case where an application has been made under this Section."

This Amendment is necessary. We have now redrafted the Clause so as to provide for the case of applications under Section 5 of the Finance Act, 1897. The Amendment is purely consequential.

(who was indistinctly heard): I beg to move, to leave out the Clause.

This Clause abolishes Settlement Estate Duty and at the same time abolishes the relief from Estate Duty given by the Finance Act of 1894 in respect of settled property, Estate Duty, of course, being imposed for the first time by that Act. It gave this relief to settled property, for reasons which commended themselves to the authors of that Act, and for the time being relieved settled property from the new imposition placed upon it for the first time by the Act of 1894. After twenty years it is sought, not only to retain the burden which is placed on property by that Act, but to abolish the relief given to settled property, whether that relates to existing settlements or to future settlements. The revenue to be derived this year from the alteration of the law proposed is only the paltry sum of £150,000. Next year the Chancellor of the Exchequer estimates that this alteration will give £900,000 a year to the Exchequer. We are considering, as regards this Finance Bill, mainly, of course, and making pro vision for the needs of the present year, and therefore, if my Amendment is accepted, it will make little or no difference whatever to the revenue of the present year. At the same time, if the Amendment is not accepted Parliament will be sanctioning a most stupendous and fundamental change, as I think without any proper consideration whatever, and I appeal to the House to pause before they make such a considerable alteration of the law which for this year will give such a very trifling sum to the revenue, but may have and will have the most far-reaching effect which none of us at present can contemplate, and which we certainly have not at present considered and have had no opportunity of considering in the short time at our disposal. I leave out for the moment the question of a breach of contract with a person inheriting under existing settlements. The effect of this alteration will, in the first instance, abolish the inducement to make settlements at all, because there is no doubt that since Estate Duty was imposed as a new burden and these relief Clauses were inserted in the Act of 1894, there have been many more settlements effected both of land and personal property, and especially of land, and if this Clause is passed, it will have the effect of abolishing the inducement, which there has been in the past, and is now, to make settlements. It would impose on settled properties, of course, very heavy additional duty, and that duty and burden will be mainly felt, I think, in the case of land.

The Chancellor of the Exchequer drew a comparison between estates which were settled and estates which were unsettled, and thought it was unfair that settled estates should get the benefit of this relief, and said that there was a large number of properties in this country which had descended from father to son from time immemorial, but which had never been settled. I believe that statement to be perfectly correct. Certainly, there are many cases within my own knowledge. But this duty was imposed for the first time in 1894, and before that year exactly the same duty, as far as I know, was payable in respect of settled and unsettled property in land. There was no exemption in favour of settled property, and in those days it made no difference to a man, as regards duty, whether his property was settled or un- settled, and it is for that reason that so many properties have descended from father to son, not being the subject of settlement. But for the first time, in 1894, these very heavy Estate Duties were imposed on land. Prior to 1894 the only duty which was payable on land, whether it was settled or unsettled, was a moderate Succession Duty calculated on the value of the life interest of the person succeeding to the property, and that system prevailed both in regard to settled and unsettled property. In 1894 an attempt was made to put the same duty on personalty and realty, but relief was given in the case of settled property. Owners of land thereupon took advantage of that relief Clause, and they have made many more settlements since 1894 than existed before that date. There is no doubt about that at all. The Chancellor of the Exchequer states also that he wishes to put land and personalty on the same footing. He thinks it is fair that it should be on the same footing. Prior to 1894 land did not pay these heavy Death Duties, and I have always understood that they did not pay them because the owner of the land was annually paying a much greater share of the country's burden in the form of rates and taxes than the owner of personalty.

indicated dissent.

I remember I asked, when I came to look into these things many years ago, why Death Duties were not payable by the owners of land in the same way as by the owners of personal property? And the answer I received was, "How can you expect a man to pay the country's burdens again on his death when he has paid them annually all his lifetime?" That point cannot have been overlooked when the Act of 1894 was passed. Since that date those burdens have increased hugely, and if realty and personalty are to be placed on the same footing, the least that can be done is to place them on the same footing not only as regards Death Duties, but as regards the annual burdens also. And if that was done. I do not know that the owners of realty would have very much fault to find with the proposal. Then the Chancellor of the Exchequer himself has since the 1894 Act placed heavy additional burdens on land. You cannot buy land, and you cannot lease land, without paying double the duties which were paid in 1894. The People's Budget, as it is called, doubled the stamp duties every time land is sold. It doubled the duties every time land is leased, and it placed for the first time an ad valorem duty on voluntary settlements. Under those Sections of the Finance Act about £3,000,000 has been paid. The point has been very much overlooked, but when you wish to compare the position of the owners of land and the owners of personalty, I think it is a point to which prominence should be given. The exact figure which I got from the Chancellor of the Exchequer is £2,965,000 up to April last. In addition to the duties, besides the cost of the valuation of land—I am not referring to the cost to the State, but to the cost to the owners of land—if the owners of land make any profit, they have to pay Increment Value Duty. If an owner is not developing it, he has to pay Undeveloped Land Duty, and at the termination of a lease he has to pay Reversion Duty. If there are minerals, he has to pay Mineral Rights Duty.

All these are new burdens imposed on land by the Chancellor of the Exchequer. When considering the reasons which the right hon. Gentleman gave for introducing this Clause to abolish relief in the case of settled estate these things should not be overlooked—all the additional burdens he has put on land since he has been in office. It is impossible for landed estates to bear the additional burdens. I do not know whether it is the desire of the Chancellor of the Exchequer and other Members of the Government to break up landed estates. Certainly the effect of their legislation has been most disastrous on the agricultural and landed industry, and on the development of land generally, and not only on agriculture, but on building development. I do not think any Member representing a rural constituency would go down to his constituents and tell them that it is desirable in the interests of the country that landed estates should be broken up. The Departmental Committee which reported on this matter found the exact contrary on the evidence brought before them, and yet the effect of the proposal we have now under consideration is to bring about that which the Departmental Committee and all who have the true interests of the country at heart know is fatal to our industry. By way of anticipation of the right hon. Gentleman's reply, I would say that he may tell us, "I must have this sum of money for revenue purposes." As I said before, it is only a paltry sum of £150,000. I would point out to him that next year it will be £900,000, and I would suggest that if he cannot do it now, he should next year repeal the Land and Valuation Clauses of the People's Budget. That will give a clear £1,000,000. It will be the most popular proposal ever put before the country or the House of Commons, and I am sure that a sigh of relief would be given by everyone connected with land and house property if they heard that the People's Budget and all the Land Taxation and valuation proposals were to be repealed.