Section thirty of The Finance Act, 1919, is hereby repealed so far—as it affects interest—accruing due after the commencement of this Act.—[ Lieut.-Colonel Royds.]
Brought up, and read the First time.
I beg to move, "That the Clause be read a Second time."Eight years are allowed by law now for the payment of Estate Duty in respect of land, and the rate of interest by the Finance Act, 1919, was raised from 3 per cent, to 4 per cent. You are not entitled to deduct Income Tax, and it has to be added to the 4 per cent. interest which you pay now on the arrears a Estate Duty, which is equivalent to being at, the rate of £5 6s. 8d. per cent. This was much too high, having regard to the present value of money. The object of this Amendment is to repeal the Section of the 1919 Act to reduce the rate of interest again to 3 per cent. which, I think, is a fair rate. I know I shall be met by the statement that the Government cannot concede the point, because they have only just agreed to charge 4½ per cent. in respect of arrears of Excess Profits Duty. The two cases are not analogous because in the case of Excess Profits Duty that is a concession made. It was never intended that that should be an arrear but a concession. The case of Estate Duty is a statute by law, and was fixed at 3 per cent. It is now owing to the Income Tax not allowed to be deducted £5 6s. 8d. I hope the Government understanding the position will be prepared to concede the point I ask.
We cannot accept this Clause. The rate was, as the Mover mentioned, raised from 3 per cent., not to 4 per cent. in 1919. I submit to the Committee that it ought to stay there. It is essential, where the Government is allowing money to stand out which eventually is to be paid to the Government., whether voluntarily or under Statute, that there should be no inducement to the debtor to postpone payment in order to get the use of the money when it is wanted by the State, If you charge a low rate of interest, you necessarily give him an inducement. The only thing to do is to charge interest rather higher than the market rate. A rate of 5⅓ per cent. is by no means an undue rate of interest for the purpose.
Did the hon. and gallant Gentleman say 5⅓ per cent?
Question, "That the Clause be read a Second time," put, and negatived.
A new Clause ( Option as to payment of estate duty in. certain eases) stood on the Order Paper in the name of Mr. Ormsby-Gore.
On behalf of my hon. Friend the Member for Stafford (Mr. Ormsby-Gore) I desire to move—
That is impossible until the end of the new Clauses. If Members whose names are against any particular Clause are not present, it cannot be moved.