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New Clause—(Exemption Of Income Of Person Casually Employed)

Volume 155: debated on Wednesday 28 June 1922

The text on this page has been created from Hansard archive content, it may contain typographical errors.

"Notwithstanding anything in the Income Tax Acts, the income of a wage-earner who is casually employed by the hour or less period and who is not in the regular employment of one employer shall be exempt from Income Tax."—[Mr. Hayday.]

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

There is in industry quite a large number of casually employed workers. They abound mostly round the dock and wharf areas and in seasonal industries. These men, in common with other industrial workers, are subject to quarterly assessments for the purpose of Income Tax. They are, perhaps, employed during one quarter of the year for about two or three weeks in that quarter, and during those two or three weeks, they may have half-a-dozen different employers. That quarter, when it comes under review, is not subject to any Income Tax demand. The next quarter may find the casual worker more successful; he may be employed almost the whole time by about 20 different employers. That quarter's income comes under review and it might well reach a total that makes Income Tax payable for the quarter. The position is this: The casual worker has had one quarter with very little income. There has been an accumulation of debts; perhaps arrears of rent have accrued. The keeper of the little corner shop has made certain advances in the hope that more regular employment will be obtained by this particular casual worker. The second quarter being the one which would bring the worker under review for Income Tax, he has first to fulfil the obligations left over from the bad quarter, by meeting his debts and arreas of rent. [Interruption.] If hon. Members listen, they will see that I am merely trying to present the different state of circumstances prevailing in the case of a casual worker; to point out the distinction between the casual worker and the person in receipt of a regular annual income. After he has met these arrears the third quarter comes along, and with it the demand for Income Tax based on the second quarter. Hon. Members of the Committee have got to appreciate that fact—the demand comes in the third quarter following on the ascertainment of the second quarter's earnings, the assessment being on the quarterly income. In the third quarter the man may, unfortunately, through the seasonal nature of his occupation, or a lessening of employment at the docks, find himself facing another bad period as regards income. He may be unable to meet the demand, and as a result, he is threatened with being brought before the justices. He may, eventually, be brought before the justices; he may demonstrate to them that he cannot pay, and they will inform him that there is an Act of Parliament which says he must pay, and if he does not pay he must go to prison. We consider that to be a definite hardship.

The Chancellor of the Exchequer may say that, although the man has difficulty in meeting the demand for the good quarter, he can at the end of the year review the whole of his annual income and can make a claim if, on the annual basis, he is entitled to do so. Those who have had correspondence on the subject of the rectification of Income Tax demands know very well that the casually employed men with his slender income, with his secondary social status, will get secondary consideration. Much time and trouble will be required before he can satisfy men working by rule, on strict regulations, that he has a right to be relieved of the demand or have any sum returned to him. Yet this money may have to be paid by him at the risk of going another few weeks in arrears with his rent. He is between two stools. On the one hand there is the threat of the landlord to take him into Court for the recovery of the arrears or eject him from the house; on the other the prospect of the Income Tax authorities prosecuting him for nonpayment, with the possibility behind it, of a period of imprisonment. I think the Chancellor himself will appreciate that, in these circumstances, more money is spent in the value of the time of those who institute inquiries on behalf of the Income Tax Department, in endeavouring to secure these small sums, than the sums themselves represent. If the Chancellor agrees that the circumstances are as I have stated, perhaps he will frame an agreement or re-word the Clause—we do not care which, so long as the purpose we have in view is satisfied. We are pleading that the casual worker in this country, handicapped as he is, should not be further handicapped in his struggle during the present period of depression in employment.

The Committee will realise that, in regard to the Amendment now under discussion, dealing with casual labour, it is very important to remember the exemptions from tax, which the Acts confer upon everybody, by reference on the one hand to the total amount of their income, and on the other to their family and other obligations. A man living by himself to-day pays no tax for the first £150 of his income, so that, roughly, £3 per week—in the case of a man regularly employed all through the year, week in and week out—escapes Income Tax. If he is a married man, his total exemption is £250 and then there are allowances for children, so that the married man with three children pays no tax at all provided he has only an earned income which does not exceed £350. Even on the basis of the single man's entitlement to exemption, covering £150 a year, when we are dealing with an Amendment which presses for special treatment for casual labour on the ground of its uncertainty, and, in some trades, of its seasonal character, rendering employment slack at certain times of the year, we have to bear in mind that the £150 is a much higher effective limit in such cases than if the man were regularly employed all through the year. A man who, on the average of the year, is only employed say four days in six per week, or two-thirds, will in that two-thirds of the year have to earn £150 before coming under tax at all. Consequently, we must assume, even in the case of single men, that such a worker is in receipt of wages at a much higher rate than £3 per week. I know that casual labour is not employed by the week, and I am not suggesting that the terms of employment are by the week, but it means that this Amendment is addressed, even in the case of single men, to those cases in which the wages, however paid, amount to over £150 in the year.

In the case of married men with children, it means that for practical purposes very few manual labourers at all are affected, and the Income Tax on weekly wage-earners enforced quarterly is only enforced under law on weekly wage-earners by way of manual labour. Therefore, we have to bear in mind that the claim on the sympathy of the Committee cannot be made on the footing that we are dealing here with very poor and struggling men. That is not the case at all. We are dealing with men who are in receipt of a rate of wages which in clerical walks of life means a clerk, of a good position as regards his career in life, and therefore is one that we must deal with, not on charity grounds, not eleemosynary grounds, but from the ordinary fiscal point of view. The Income Tax Acts recognise one basis of exemption as a main basis, namely, a limit of income, and that applies to everybody all through the community. Another basis of allowance—not of exemption—is family obligations, and that has been extended to certain cases where a man has lost his wife and so on and has a house-keeper or whatever it may be, but we have never in Parliament in the whole history of the Income Tax Acts adopted as a basis for exemption any such criteria as the terms of employment by which a man earns his income. I submit that it is a wrong basis and that Income Tax ought to be applied on terms that apply throughout the whole community and that this system of exceptions is a bad system.

One word more as regards the particular point raised by the hon. Member, that a man may have a good quarter followed by a bad quarter, and be assessed in the bad quarter and asked to pay tax in the next quarter, which is also a bad quarter. In fact, the method of assessment is one which takes into account to a great extent the averaging of the earnings and the grievance in practice is tempered very considerably. I want to point out that in the collection of Income Tax, as distinguished from the basis of assessment, administrative discretion is bound to come in to a certain extent. Administrative discretion in applying the law is a necessity, and in regard to the collection of tax we cannot help it. We are all creditors at times in our lives, unfortunately, and we all from time to time give time to our debtors—again I say unfortunately, but it is so—and even the tax collector is in the same case. I assure the Committee that every endeavour is made to prevent hardship in the collection of this tax. The provision of Parliament that it should be collected quarterly instead of yearly was made for the express purpose of trying to prevent individual hardship.

Say the first quarter of the finnacial year happens to be the good quarter. In the second quarter the man is assessed on his first, which would bring him in on the average for Income Tax purposes. During that second quarter the assessment is served upon him. His third quarter is no better, and by that time he is before the police court. His fourth is only a slight improvement. Then, when you take the average of the four, it is found that no demand ought to have been made it all. That is the problem that we are up against.

I venture really to assure the Committee that that gloomy picture that has been painted is one that very, very rarely, if ever, happens in practice.

An hon. Member says "every week." That, kind of exaggeration is very undesirable, and if the hon. Member who interrupted will be so good as to give me concrete cases afterwards I will have those individual cases investigated at once. Let the Committee think for a moment what alternative method of collection there is, if you are going to tax wage-earners to Income Tax at all, except the quarterly assessment and collection, with such a degree of human indulgence in hard cases, by way of postponement, as may be reasonably necessary in individual cases. The only alternative is deduction from wages at the source by the employer. That alternative was put forward and was objected to by the representatives of the men, on the ground that they did not want the employer to know what was the income upon which they were paying tax—the very reasonable objection that they did not want their private means disclosed to their employers. The employers also thought that if the system were adopted it might lead to friction between employers and employed, and I think both sides were agreed at the time that deduction at the source was not the method that they wanted, and for those reasons it was not adopted, but it is the only alternative to the method now pursued.

In regard to the question of principle, I agree that the fact that a man earns an income which is taxable in a casual employment is no reason for distinguishing him from a man who earns an income in regular employment, but, as I understand it, the substantial point which has been made by my hon. Friend the Member for West Nottingham (Mr. Hayday) is this, that these men who earn their living in this casual way and have at times in the year been taxable, are worried unnecessarily.

4.0 p.m.

It has arisen in the Debate, and we are entitled to discuss it. My hon. Friend assures me he has personal knowledge of such cases, and there are other Members also who have such knowledge, for I cannot imagine that they would put up a purely theoretical case, and the answer which the learned Solicitor-General gives is this, that the human sympathy in administration ought to meet the exceptional difficulties. The case made is that that does not work fairly, and that these men are subject to worry and anxiety in regard to payments which might reasonably be avoided. In considering these matters, we have to put ourselves as far as we can in the place of these men, who are not trained in the observation of official and legal documents, and who are frightened by the service of these notices in a way that my right hon. and learned Friend and myself are not frightened. I am only seriously alarmed when I get the red or blue notice. That is not the case with the class of citizens with whom my hon. Friend is dealing, and the point I would urge is whether there is not some way of meeting this administrative hardship. The right hon. and learned Gentleman says that there is not any hardship, but my hon. Friends behind me say that they know of cases. That point ought to be cleared up, and the Department ought to see that these men, unaccustomed to these legal and sufficiently terrifying forms, and working under these conditions, are relieved as far as possible from this unnecessary anxiety.

The right hon. and learned Gentleman, in dealing with this case, has made one or two surprising statements. First of all, we were surprised to hear that there is such a superabundance of human sympathy exhibited in the collection of the Income Tax. We are glad to hear that it exists, and we give credit to those who exhibit it. His second surprising statement was that very few cases of hardship have occurred. I would very much like the Department to ascertain for themselves the number of summonses and the number of men who have been hauled up to the Police Court and convicted within the last six months. I want to qualify that at once by saying that within the last few months there has not been that persecution that existed previously. There has been a little more human sympathy exhibited, but the system continues and the hardship of the system is there. The only difference is that though the men still receive their demand notes they hear very little more about them. The danger, however, is always there. The debt exists, or at least they say that it does, and, consequently, the man is always in danger of being brought up for default. The right hon. and learned Gentleman has expounded the position so far as the ordinary Income Tax payers are concerned. We do not find fault so much with the law as with the administration of it. It is quite true that there is this quarterly system of payment. The casual dock labourer works for anyone who will employ him. Each employer has to send a return of the man's earnings day by day, and at the end of the quarter his account is made up. Then, probably about the middle of the next quarter, if he has had a fairly good quarter's work, he gets his demand note. Have hon. Members ever heard a real docker express himself with regard to these demand notes for Income Tax? If they have not, there is a treat in store for them. The most expressive person in the world is one of these dockers who has nothing but debts, whose best suit of clothes is lying in the pawnshop, and whose landlord is clamouring for arrears of rent, at the same time that the Income Tax collector is saying, "You have got to pay or go to gaol." It is true, and it is tragic.

The average casual labourer does not know sufficient about the methods of Income Tax administration to realise what he has to do. If he did, it would not matter, because, if he has not paid on the demand note, he is in debt, and, consequently, cannot get a rebate or a return of money overcharged. He cannot pay; he has not the means to pay. Although he may have earned sufficient in one quarter to make him assessable for Income Tax, for the rest of the year he scarcely earns enough to maintain existence. Income Tax is only chargeable on the income for the year. If a single man has earned £150 in the year—it does not matter whether he has had one good quarter and two bad quarters or how it is—he is assessable, and so is a married man according to the figures set forth. That is quite right, and we are not quarrelling with it. We quarrel with the system by which, if a man earns only £80 or a year, he has to pay on the first quarter in which he may have earned the greater portion of his income. I am trying to bring out the trouble and difficulty with which we are faced every day. I want to pay tribute and speak fairly of public servants who are always ready to help with information; but imagine one of these officials with perhaps 150 dock labourers demanding satisfaction. He is not in the frame of mind to reason or to argue, and consequently confusion arises. Go into some of our large docking centres and investigate the question; get the returns; get the number of summonses and the number of convictions—these things will tell their own tale. I think we have said sufficient to prove that the hardship exists. We are not trying to evade just payment of Income Tax. We are not here to help tax dodgers. There are enough of them to be found among the employing class, and among company promoters and people of whom we have heard so much during the last two days. We do not want to add to their numbers, but we do not want this hardship to fall upon the most hardly pressed class. I should like to know what it would cost if this Clause were accepted. What would be the loss in revenue? These summonses are being issued and there must be a sufficient staff to do the work. What is the cost and what is the return that is obtained? These are points which ought to be considered. Above all, we want to make it clear that we are not here to evade just payment of taxation, but we

Division No. 183.]


[4.13 p.m.

Banton, GeorgeJones, Morgan (Caerphilly)Rose, Frank H.
Barker, G. (Monmouth, Abertillery)Kenworthy, Lieut.-Commander J, M.Royce, William Stapleton
Barnes, Major H. (Newcastle, E.)Kenyon, BarnetSwan, J. E.
Barton, Sir William (Oldham)Kiley, James DanielThomson, T. (Middlesbrough, West)
Bowerman, Rt. Hon. Charles W.Lawson, John JamesWalsh, Stephen (Lancaster, Ince)
Bromfield, WilliamMalone, C. L. (Leyton, E.)Watts-Morgan, Lieut.-Col. D.
Cairns, JohnMyers, ThomasWhite, Charles F. (Derby, Western)
Carter, W. (Nottingham, Mansfield)Naylor, Thomas EllisWilliams, Col. P. (Middlesbrough, E.)
Davies, A. (Lancaster, Clitheroe)Newbould, Alfred ErnestWintring ham, Margaret
Edwards, C. (Monmouth, Bedwellty)O'Connor, Thomas P.
Foot, IsaacO'Grady, Captain James


Irving, DanRendall, AthelstanMr. Hayday and Mr. Wignall.
John, William (Rhondda, West)Richardson, R. (Houghton-le-Spring)


Adair, Rear-Admiral Thomas B. S.Fell, Sir ArthurKinloch-Cooke, Sir Clement
Agg-Gardner, Sir James TynteFildes, HenryLambert, Rt. Hon. George
Allen, Lieut.-Col. Sir William JamesFisher, Rt. Hon. Herbert A. L.Larmor, Sir Joseph
Archer-Shee, Lieut.-Colonel MartinFitzRoy, Captain Hon. Edward A.Leigh, Sir John (Clapham)
Armstrong, Henry BruceFlannery, Sir James FortescueLewis, T. A. (Glam., Pontypridd)
Ashley, Colonel Wilfrid W.Ford, Patrick JohnstonLindsay, William Arthur
Astor, ViscountessForestier-Walker, LLloyd, George Butler
Baird, Sir John LawrenceFraser, Major Sir KeithLocker-Lampsom G. (Wood Green)
Baldwin, Rt. Hon. StanleyFrece, Sir Walter deLocker-Lampoon, Com. O. (Ht'ingd'n)
Balfour, George (Hampstead)Gardner, ErnestLorden, John William
Banbury, Rt. Hon. Sir Frederick G.George, Rt. Hon. David LloydLowe, Sir Francis William
Barker, Major Robert H.Gibbs, Colonel George AbrahamLowther, Maj.-Gen. Sir C. (Penrith)
Barnston, Major HarryGilbert, James DanielMcCurdy, Rt. Hon. Charles A.
Barrand, A. R.Gilmour, Lieut.-Colonel Sir JohnMacdonald, Rt. Hon. John Murray
Beauchamp, Sir EdwardGoff, Sir R. ParkMackinder, Sir H. J.(Camlachie)
Beckett, Hon. Sir GervaseGoulding, Rt. Hon. Sir Edward A.McLaren, Robert (Lanark, Northern)
Bell, Lieut.-Col. W. C H. (Devizes)Gray, Major Ernest (Accrington)Macnamara, Rt. Hon. Dr. T. J.
Bellairs, Commander Canyon W.Green, Joseph F. (Leicester, W.)Macpherson, Rt. Hon. James I.
Benn, Sir A. S. (Plymouth, Drake)Greene, Lt.-Col. Sir W. (Hack'y, N.)Macquisten, F. A.
Bonn, Capt. Sir I. H., Bart.(Gr'nw'h)Greenwood, Rt. Hon. Sir HamarMallalieu, Frederick William
Bethell, Sir John HenryGreenwood, William (Stockport)Malone, Major P. B. (Tottenham, S.)
Bigland, AlfredGreer, Sir HarryMason, Robert
Bird, Sir R. B. (Wolverhampton, W.)Greig, Colonel Sir James WilliamMatthews, David
Boscawen, Rt. Hon. Sir A. Griffith-Gritten, W. G. HowardMiddlebrook, Sir William
Bowyer, Captain G. W. E.Guest, Capt. Rt. Hon. Frederick E.Mond, Rt. Hon. Sir Alfred Moritz
Breese, Major Charles E.Hacking, Captain Douglas H.Montagu, Rt. Hon. E. S.
Bridgeman, Rt. Hon. William CliveHamilton, Sir George C.Moore-Brabazon, Lieut.-Col. J. T. C.
Brown, Brig.-Gen. Clifton (Newbury)Harmsworth, C. B. (Bedford, Luton)Morrison-Bell, Major A. C.
Bruton, Sir JamesHarmsworth, Hon. E. C. (Kent)Munro, Rt. Hon. Robert
Burgoyne, Lt.-Col. Sir Alan HughesHerbert, Col. Hon. A. (Yeovil)Murchison, C. K.
Burn, Col. C. R. (Devon, Torquay)Hills, Major John WallerMurray, Hon. A. C. (Aberdeen)
Casey, T. W.Hinds, JohnMurray, Rt. Hon. C. D. (Edinburgh)
Cautley, Henry StrotherHoare, Lieut.-Colonel Sir S. J. G.Murray, John (Leeds, West)
Clough, Sir RobertHolbrook, Sir Arthur RichardNall, Major Joseph
Cohen, Major J. BrunelHope, Sir H. (Stirling & Cl'ckm'nn'n,W.)Neal, Arthur
Colvin, Brig.-General Richard BealeHope, Lt.-Col. Sir J. A. (Midlothian)Newman, Colonel J. R. P. (Finchley)
Cowan, D. M. (Scottish Universities)Hope, J. D. (Berwick & Haddington)Newman, Sir R. H. S. D. L. (Exeter)
Craig, Captain C. C. (Antrim, South)Hopkins, John W. W.Newson, Sir Percy Wilson
Davidson, J. C. C. (Hemel Hempstead)Hopkinson, A. (Lancaster, Mossley)Nicholson, Brig.-Gen. J. (Westminster)
Davies, David (Montgomery)Horne, Sir R. S. (Glasgow, Hillhead)Nicholson, Reginald (Doncaster)
Davies, Sir David Sanders (Denbigh)Howard, Major S. G.Norman, Major Rt. Hon. Sir Henry
Davies, Thomas (Cirencester)Hunter, General Sir A. (Lancaster)Norton-Griffiths, Lieut.-Col. Sir John
Davies, Sir William H. (Bristol, S.)Hurd, Percy A.Ormsby-Gore, Hon. William
Davison, Sir W. H. (Kensington, S.)Hurst, Lieut.-Colonel Gerald B.Palmer, Major Godfrey Mark
Dawson, Sir PhilipInskip, Thomas Walker H.Palmer, Brigadier-General G. L.
Dewhurst, Lieut.-Commander HarryJackson, Lieut.-Colonel Hon. F. S.Pearce, Sir William
Dockrell, Sir MauriceJames, Lieut.-Colonel Hon. CuthbertPerkins, Walter Frank
Doyle, N. GrattanJesson, C.Philipps, Gen. Sir J. (Southampton)
Edwards, Major J. (Aberavon)Jodrell, Neville PaulPickering, Colonel Emil W.
Edwards, Hugh (Glam., Neath)Johnstone, JosephPilditch, Sir Philip
Erskine, James Malcolm MonteithJones, J. T. (Carmarthen, Llanelly)Pollock, Rt. Hon. Sir Ernest Murray
Eyres-Monsell, Com. Bolton M.Joynson-Hicks, Sir WilliamPownall, Lieut.-Colonel Assheton
Falcon, Captain MichaelKelley, Major Fred (Rotherham)Pretyman, Rt. Hon. Ernest G.
Falle, Major Sir Bertram GodfrayKidd, JamesPurchase, H. G.

want to relieve the pressure of hardship upon these people who are least able to bear it.

Question put, "That the Clause he read a Second time."

The Committee divided: Ayes, 35; Noes, 224.

Rea, Sir Henry N.Shaw, Hon. Alex. (Kilmarnock)Turton, Edmund Russborough
Raeburn, Sir William H.Shortt, Rt. Hon. E. (N'castle-on-T.)Waddington, R.
Ratcliffe, Henry ButlerSimm, M. T.Ward-Jackson, Major C. L.
Rawlinson, John Frederick PeelSmithers, Sir Alfred W.Ward, Col. L. (Kingston-upon-Hull)
Rees, Capt. J. Tuder- (BarnstapleSprot, Colonel Sir AlexanderWaring, Major Walter
Reid, D. D.Stanley, Major Hon. G. (Preston)Warner, Sir T. Courtenay T.
Remnant, Sir JamesStanton, Charles ButtWeston, Colonel John Wakefield
Renwick, Sir GeorgeStarkey, Captain John RalphWheler, Col. Granville C. H.
Richardson, Lt.-Col Sir P. (Chertsey)Steel, Major S. StrangWhite, Col. G. D. (Southport)
Roberts, Samuel (Hereford, Herford)Stephenson, Lieut.-Colonel H. K.Wilson, Rt. Hon. J. W. (Stourbridge)
Roberts, Sir S. (Sheffield, Ecclesall)Stewart, GershomWindsor, Viscount
Robinson, S. (Brecon and Radnor)Sturrock, J. LengWinterton, Earl
Robinson, Sir T. (Lancs., Stretford)Suoter, Rear-Admiral Murray FraserWise, Frederick
Roundell, Colonel R. F.Sugden, W. H.Wood, Major M. M. (Aberdeen, C.)
Rutherford, Colonel Sir J. (Darwen)Sutherland, Sir WilliamWood, Major Sir S. Hill- (High Peak)
Rutherford, Sir W. W. (Edge Hill)Taylor, J.Worthington-Evans, Rt. Hon. Sir L.
Sassoon, Sir Phillip Albert Gustave D.Thomas, Sir Robert J. (Wrexham)Yate, Colonel Sir Charles Edward
Scott, A. M. (Glasgow, Bridgeton)Thomson, F. C. (Aberdeen, South)Yeo, Sir Alfred William
Scott, Sir Leslie (Liverp'l, Exchange)Thomson, Sir W. Mitchell- (Maryhill)
Seddon, J. A.Tickler, Thomas George


Seely, Major-General Rt. Hon. JohnTownley, Maximilian G.Colonel Leslie Wilson and Mr. Dudley Ward.
Sharman-Crawford, Robert G.Tryon, Major George Clement

The following new Clause stood on the Paper in the name of Mr. G. LOCKER-LAMPSON:

"Where in any year of assessment any profits or income in respect of which a person has been charged or is chargeable under Case III of Schedule D finally cease to arise to that person he shall be charged for that year on the amount of the profits or income of that year and if the tax charged has been paid, any amount overpaid shall be repaid."

I quite realise that, in certain circumstances, which, I think, would very rarely occur, there might be a charge. Therefore, if after the word "charged," I put in the words "if he so elect," I think with those words it would be quite impossible for any charge to be imposed.

I think the words had better come in after the word "shall." I will accept it in that form.