If any person makes an insurance on his life or on the life of any other person with any insurance company legally established in the United Kingdom or in any British possessions or lawfully carrying on business in the United Kingdom and the policy of insurance expressly states that such insurance is made with the primary object of providing for estate duty which may become payable on the death of the assured and that so much as the holder of such policy or his legal personal representatives may direct of the capital stun payable thereunder will, on the death of the assured, be payable by the insurance company direct to the Commissioners of Inland Revenue for the purpose of being applied in or towards the payment of such estate duty, then, to the extent to which such capital sum is so paid and applied the same shall not for the purposes of death duties he deemed to be property passing on the death of the assured.—[Mr. Lane-Fox.]
Brought up, and read the First time.
I beg to move, "That the Clause be read a Second time."This Clause was moved last year and I hope that now more favourable consideration will be given to it. When Death Duties were first instituted it was suggested that persons should insure their lives for the purpose of leaving their property less severely taxed.
Will my hon. Friend speak a little louder?
A great many individuals have insured their lives under the encouragement of the Government, and the effect of that is that higher duties have to be paid. In view of the constant encouragement given in favour of this insurance it is very unfair that the rate of taxation should thereby be increased.
Again I regret that the Government cannot accept this Amendment. The hon. Member who moved the Clause said that hopes were held out in 1894 that, if the risk was insured, some compensation by way of relaxation in favour of those who insured might be looked for in the future. I think that is an incorrect version of what took place at the time. I have before me a note of what Sir William Harcourt said when introducing his proposals. He said such a proposal was not practicable. The matter came up again in the spring of 1916, when the present Prime Minister was Chancellor of the Exchequer, and he pointed out that in order to carry it out it would be essential to ear-mark the proceeds of the policy for the payment of Death Duties, and he explained that to do so would mean that the amount received under the insurance policy would be exempt altogether from Death Duties. That is the real difficulty. If you do not exempt the policy moneys from Death Duties then they are on the same footing as any other investment. One man may like to save by means of insurance, and another by investments of a different kind. Why should one kind of investment be exempt from Death Duties and not another kind of investment? If it be suggested that the policy moneys, which of course are part of the estate which passes at death, are to be treated as not being a part of the estate, then it is giving a very large exemption from Death Duties to one particular form of investment. These are the broad reasons why the proposal has never been capable of adoption, although primâ facie there is a good deal to say in its favour. The loss if the proposal were adopted would be over £3,500,000.
Question, "That the Clause be read a Second time," put, and negatived.