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Volume 393: debated on Tuesday 2 November 1943

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1. A person shall be deemed to satisfy, as respects the year 1943–44, the conditions as to pensions specified in this Part of this Schedule if and only if, in the said year, he was in receipt of a pension which is relevant for the purposes of this Part of this Schedule and the total amount of all such pensions received by him for that year does not exceed six hundred pounds:

Provided that if for any part of that year the person in question was not in receipt of any pension which is relevant for the purposes of this Part of this Schedule, the said limit of six hundred pounds shall be proportionately reduced.

2. The pensions which are relevant for the purposes of this Part of this Schedule are all pensions except pensions in respect of service in or with the armed forces of the Crown.—[ Sir J. Anderson.]

Brought up, read the First and Second time, and added to the Bill.

Bill reported, with Amendments (changed to "Income Tax (Employments) Bill"); as amended, on re-committal, considered.

Motion made, and Question proposed, "That the Bill be now read the Third time."

Before we part with this Bill there are one or two things I would like to say. We may describe what has just been done as a postscript. The postscript is tied on to the Bill by the speech which the Chancellor of the Exchequer has made to-day. The Bill is going through this House with the postscript that we have the assurance that there will be, in effect, an Amendment made to the Bill during the next Session. It is on that understanding, which we are sure the Chancellor will implement, as he has undertaken to do, that the Bill is leaving this House. There is, however, one very small point which seems to me to be of some little substance and which we have not hitherto touched upon. If hon. Members will turn to paragraph 23 of the White Paper, they will find there set out the procedure which is contemplated in this Bill in regard to married women, and with regard to one of the matters therein contained the Chancellor may do well to look again. If I had not raised this question now and if the Chancellor were not to make that promise, he would be more or less bound by the precise terms of the White Paper in dealing with all the formal regulations that are therein contained in handling Income Tax.

There is one provision in paragraph 23 that needs consideration. The principal object of the Bill is that people should pay Income Tax as they earn it and that there should be no arrears of taxations which would subsequently be brought up against them. But where you have the case of a married couple, both of whom are working, they are both having certain deductions made from their wages earned week by week. Against the deductions that are enforced upon them there are certain allowances. Those allowances consist of the personal allowance of the husband, the married allowance which is also granted to the husband and—I am assuming the case of the married women in work—there is the allowance to the married woman of £80 per annum as a working and earning married woman. So far, the question I wish to bring forward does not arise, but beyond that there are the two distinct rates at which Income Tax is charged. There is the rate which prevails for the next £165 of income at 6s. 6d. in the £ and the rate of 10s. on all income above that figure. According to our Income Tax law as it is at present, the incomes of the husband and wife are taken together, and as a couple they are entitled to this £165 at the lower rate of tax. The Inland Revenue were confronted with a question of how they were to deal with that in the case where both the husband and wife are at work. What they have done—and it would appear rather generous in a sense—is that they are prepared in the first instance and during the year to allow £165 both to the husband and to the wife for the time being with the intention at the end of the year of making the necessary adjustments. It is true that there will be a large number of cases where that does not raise any serious issue, for instance, in the case of members of the Forces, who are outside the provision altogether, and where the wife is earning just over £80, but where both the husband and the wife are in industrial employment and are both earning good wages there may be an over-allowance amounting to over £28.

Supposing that at the end of the period the wife ceases to work, then the husband in the ensuing period will suddenly find himself confronted with a bill for arrears amounting to over £28, or more than 10s. a week, for which he will become liable in the period following that in which his wife was working and was getting this £165 at the lower rate of tax. I have not raised this matter in order to press the Chancellor for a final decision to-day—it is a complicated matter, and the amounts involved will vary; many will not be so much as £28—but I suggest that he gives it a little further attention. On this question of underpayment and overpayment of tax, the attitudes of the well-to-do person and the weekly wage-earner are exactly opposed. The well-to-do taxpayer is rather pleased in many cases if he is undercharged tax for a time and has to pay up later, whereas the working-class manual worker, or person in receipt of a weekly wage, would much rather pay too much at the time and get something back a little later. The suggestion I make is that this Bill, excellent as it is in other ways, is creating for the first time this arrear of taxation which for the kind of persons I am envisaging may be a very unfortunate thing and one which they would be the last to wish to occur. Personally, I should have thought that the problem might have been solved by giving, in the case of a married couple both at work, half the concession—£83 each—and allowing the adjustment to be made at the end of the period. It may be that there are difficulties in that suggestion and that that is not the best way to do it, but at any rate I am asking the Chancellor not to feel bound, by the publication of this White Paper and the passage of this Bill, to operate precisely the scheme which is referred to in paragraph 23. If he can say that he will reconsider the matter, that will meet me and, no doubt, other Members of the House.

I would like to deal first of all with the point which has just been raised by my right hon. Friend the Member for East Edinburgh (Mr. Pethick-Lawrence). The statement he has made to the House as to the effect of the proposal he has put forward is in every respect accurate. It was thought better, as a general rule, to allow a certain under-deduction and to make it good later. But I am certainly prepared to look at the matter again, and I should think that it would be possible, a any rate where the effect of under-deduction would be substantial, to arrange to make an estimated adjustment in advance. I think there would be technical difficulty in doing it exactly as my right hon. Friend suggested, because deductions are made in accordance with the tables, but I will gladly give my right hon. Friend the assurance that I and my technical advisers will look at the matter again.

Before I sit down, might I express to my right hon. Friend particularly my gratitude for his assistance in carrying this Bill through and also my appreciation of the helpful attitude taken up by hon. Members in all quarters of the House? We have reason to congratulate ourselves on having been the means of putting on to the Statute Book a Measure which represents a very real advance in the technique of our Income Tax system. I am grateful to the House.

Question, "That the Bill be now read the Third time," put, and agreed to.

Bill read the Third time, and passed.