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Income Tax

Volume 531: debated on Wednesday 28 July 1954

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54.

asked the Secretary of State for the Colonies if he will ask the Kenya Government to increase the rate of Income Tax to the level of the United Kingdom, in view of the recent further grant of £4 million from this country.

Does not the right hon. Gentleman agree that by having a differential rate of Income Tax between Kenya and this country we are, in effect, providing an economic subsidy for the higher ranges of Income Tax payers in Kenya? Does not he agree that that is not the best way in which the money of British taxpayers can be spent upon colonial development?

The Government of Kenya have already raised taxes this year by £2½ million, which represents 10 per cent. of their total revenue. Although the rates of tax upon the lower incomes are relatively lower than those in the United Kingdom, the persons with the highest incomes pay a rate which is three-quarters that of this country. People here are getting a great deal inure for their money in the way of old-age security, free education, and many other things which are not available in Kenya.

Is my right hon. Friend aware that if the standard of living and the educational progress of the Africans are to be maintained it is essential that people in this young and growing country should not have a penal rate of taxation?

Are we to understand from the right hon. Gentleman that the Government regard this as the best way of helping to raise African standards of living?

Will the Minister state whether, if the Government intend to continue with this policy, they will consider making Kenya a grant-aided territory?

No. I think everybody understands the position. The economy of Kenya was perfectly sound and prosperous until the emergency. The emergency brought special charges and difficulties, but once it is at an end Kenya will be in a position to pay her way as she was doing before.

Is not what my hon. Friend said quite accurate, that these are subsidies by the United Kingdom taxpayers? Why should the wealthy taxpayers of Kenya pay a lesser rate of taxation than those here?

I made the matter quite clear. [HON. MEMBERS "No."] What the right hon. Gentleman said is not the case, having regard to the different circumstances of the two countries.