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Wage-Earners (Income Tax)

Volume 389: debated on Thursday 6 May 1943

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asked the Chancellor of the Exchequer whether he is aware that in many branches of industry girl piece-workers receive no wages during sickness and that when they recover and return they find accumulated Income Tax charges awaiting them so that they have not enough to live on for the time being; and whether he will investigate such tax enforcement with a view to mitigating its severity?

As the answer is rather long, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

The regulations governing the deduction of tax from wages provide, with a view to avoiding hardship, that the wages for any week shall not be reduced by deduction of tax below certain specified amounts, the amount in the case of a single person being £2. With regard to the recovery of arrears of tax, the general rule in the case of manual wage-earners is that any tax which cannot be deducted in a given week, owing to the absence of the employee through sickness or for any other reason, is carried forward and deducted in the last fortnight of the deduction period. There may, however, be some advantage from the employee's point of view in recalculating the weekly deduction when the employee returns to work, as the deductions of the accumulated tax is thus spread over a longer period. No objection is taken to the adoption of this alternative method where the employees concerned desire it.


asked the Chancellor of the Exchequer what experts, other than the Trades Union Council and the British Employers' Confederation, he has consulted in his efforts to find a satisfactory system of levying Income Tax on the current wages of industrial workers; and whether he can state their views?

While, as indicated in the Budget Debates, I look to the Trades Union Congress and the British Employers' Confederation as the principal consultative bodies in considering any changes that may be proposed, the Board of Inland Revenue, who are now actively engaged in considering the question, will gladly consider representations or suggestions from any quarter in regard to the arrangements for deduction of tax. Various suggestions for a current earnings basis have been made from time to time, but I do not consider that any useful purpose would at present be served by entering into any exposition of them. Certain aspects of the matter are discussed in the White Paper issued last year.

Is the Chancellor keeping in close touch with America and Canada in connection with pay-as-you-go arrangements?

Yes, Sir, but the hon. Member will remember the controversy that has arisen there.

Has the Chancellor made inquiries among the working people themselves, who, like most people, appear to say that they would much prefer to have the deduction made from their pay and then recover what remains afterwards as a bonus? It seems to me to be a universal desire.

The hon. Member will see a full statement on the matter in the White Paper.