§ It is hereby declared that the words "date of this Act" be substituted for the words "thirtieth day of April, nineteen hundred and nine," in Section two, Subsection three, line six, of the Finance (1909–10) Act, 1910, and further that Section two of the Revenue Act, 1911, shall be amended by the substitution of the words "date of the principal Act" for the words "thirtieth day of April, nineteen hundred and nine."
§ Mr. CASSEL
I beg to move, "That the proposed Clause be read a second time.
The Clause I propose raises a very curious point, but one of very great hardship, which I only need to state in order that the whole Committee will recognise that it is a hardship. It affects a great many transactions, in fact it affects all the transactions which took place between 30th April, 1909, and 10th April, 1910. Now 1910 is the datum line at which the Increment Duty starts, and all the land in the country is valued as from 30th April, 2588 1909. The Finance Act, 1909, came into operation on 10th April, 1910, and the period between these two dates is what I wish to deal with. During that period no Increment Duty was payable, because the Act was not in force. The result is that in the case of any man who bought during that period the vendor had to pay no Increment Duty, but if that same purchaser sells he has to pay on the profit which the other man made. I will assume that the Chancellor of the Exchequer purchased a piece of land in May, 1909, and that he resold it to me in December, 1909, at a profit of £2,000. In that case the Chancellor of the Exchequer would have to pay no Increment Duty. [An HON. MEMBER: "Why not?"] I will tell the hon. Member why not. It is because the Act was not in force then. Assuming that I now resell at precisely the same price, although that land has not changed in value I should have to pay a duty on the profit which the Chancellor of the Exchequer made. That is precisely the result of the Act as it stands, and it applies to all the transactions which took place between those two dates, and the person who 2589 bought between those two dates and resold after the Act has to pay from 30th April, 1909, in respect of a profit which arose before he was a purchaser.
The same thing applies in the case of leases. Supposing there was a lease of fourteen years which showed a profit, the same principle would apply and it is manifestly unjust. I do not suggest that this is otherwise than a mere slip. I know that the Chancellor of the Exchequer said there were complicated matters to deal with and that cases of injustice, if brought to his notice, would be considered. I think this is a monstrous hardship which any reasonable man only needs to have stated to him in order to recognise it. The effect of the Amendment I propose is that where a man bought during that period, his increment should commence as from the date he bought, and he should only have to pay from the profit which he made. I agree that the wording of the Amendment is not quite correct. Instead of substituting "the date of this Act" I think it ought to be, "It is hereby declared that the words from the date of this Act'" be added after the words "thirtieth of April, 1909." It must be an alternative and not a substitute. There is only one defence to this absolutely unanswerable case I am afraid of, and that is that the Chancellor of the Exchequer is going to tell me that this is the practice of the Inland Revenue. It is a practice contrary to law, and they recognise the injustice of it, but they are, in fact, administering the Act in a manner contrary to the law, which they themselves recognise as an injustice. If that is so, the right way to remedy it is not by illegal administration, but by amendment of the Act. However unjust a case may be, when the case comes up for this House to deal with it, the proper way to meet it is by amending legislation. It is no use of the Chancellor of the Exchequer to tell me that he is afraid the Amendment may convert the Finance Bill of the year into something less than a Finance Bill under the Parliament Act. Does he think the House of Lords are going on this ground to throw out the Finance Bill? Is he going to allow an injustice to continue or to meet it by illegal action on the part of the Department? These are the only two alternatives. This is as plain as any case can be, and I would ask the right hon. Gentleman simply to do justice.
§ Mr. LLOYD GEORGE
I think the hon. Gentleman has made out a case 2590 here for an amendment of the law. But he does not cover the whole ground. There is another case which also has to be considered in connection with it, and that is the case of contracts completed before the commencement of the Act. I will consider between this and Monday whether something cannot be done. But I want to warn the hon. Gentleman with regard to one point. I am not quite sure what view Mr. Speaker may take with regard to this Amendment. Last year I accepted an Amendment and certainly never thought it would turn the Bill into other than a Money Bill. As a matter of fact it did. I should rather like to consult with the authorities of the House. I quite agree with the hon. and learned Member that the House of Lords is not likely to take advantage of an Amendment which may be accepted in the sense of redressing a grievance. Still I have the position under the Parliament Act to take into account, and I am bound to consider it. Indeed, it would be folly on my part not to consider the question whether the Amendment would convert a Money Bill into a non-Money Bill. This is a question of policy which must guide the Liberal Chancellors of the Exchequer at any rate in framing their measures. Of course right hon. Gentlemen opposite do not labour under the same disabilities. I should like to consider these two points between this and next Monday, and, pending that, I hope the hon. Gentleman will withdraw his Amendment. I admit there is a grievance, and he is perfectly right in saying that we are not taking advantage of this provision at the present time, although I do not think he is quite right in saying that our action in this respect is illegal. He will be in a position to argue the point on Monday if he withdraws now. If I cannot see my way to put it down on Monday I suggest that he should put it down himself, and I will consider, either upon Committee stage or the Report stage, what we can do.
§ Mr. AUSTEN CHAMBERLAIN
I do not rise to press my hon. and learned Friend (Mr. Cassel) not to accept the proposal the Chancellor of the Exchequer has made to him that he should withdraw his Clause now, reserving to himself the right to move it again, but I do desire to call attention to the extreme gravity of the position. What is the position? The Chancellor of the Exchequer admits that there is a grievance, which has been accidentally created. It is not the result of 2591 the intentions of Parliament, but it is the result of our inability to foresee, when passing the Finance Act, 1909, every possible combination of circumstances with which the Act would be called upon to deal. The Chancellor of the Exchequer admits there is a grievance, and that he cannot justify the position as it stands. My hon. and learned Friend asserts, with the knowledge of a lawyer, that there are only two ways by which you can meet the grievance: one is by exercising a dispensing power for which there is no legal authority, and the other is by changing the law. You can only do it in two ways, by legislation or by Executive action for which there is no legal authority—by claiming for the Inland Revenue or the Treasury authorities that dispensing power which is refused to the King. What is the right hon. Gentleman's reply? He does not dispute that proposition, but he says, "I will remedy this, if I can, without changing the character of this Bill, so that it ceases to be a Money Bill within the meaning of the Parliament Act." So that in addition to all the inconvenience which we have hitherto foreseen from the Parliament Act, we now have the Chancellor of the Exchequer deliberately stating that if we cannot remedy an admitted grievance without taking this Bill out of the purview of the Parliament Act, then the grievance must continue.
§ Mr. AUSTEN CHAMBERLAIN
That depends upon what the inconvenience is. The inconvenience to the taxpayer who is admittedly unjustly taxed is very great in the one case, and there is no injustice to him in the other.
§ Mr. AUSTEN CHAMBERLAIN
No. Some hon. Gentlemen were glad to be able to postpone payment of their taxes. Nobody suffered any real grievance at that time. Does the hon. Member who interrupted suggest that an admitted grievance is to continue, and that redress is to be refused to individuals unjustly taxed, because if you give redress the Bill ceases to be a Money Bill within the meaning of the Parliamentary Act? It is a perfectly monstrous proposition. That is the contention of the Government and of the hon. Member, and it is a contention to which I wish 2592 to call the attention of the country, because they will see how directly the passing of the Parliament Act tends to prevent redress of an admitted grievance. The right hon. Gentleman can hardly maintain that attitude in view of the admissions he has made. He frankly anticipated the interruption of the hon. Member that he did not think there would be any evil consequences following from the adoption of this Amendment at the present time. An Amendment raising a similar point was adopted last year, and Mr. Speaker, in consequence of it, refused his certificate that the Bill was a Money Bill. It passed through the other House, just as in all probability it will pass this time. The Chancellor of the Exchequer does not pretend that he has any real danger to fear, but it is a point of pride with the Government, and to save the pride of the Government the taxpayer must pay.
§ Mr. LLOYD GEORGE
I think the right hon. Gentleman is quite unconsciously exaggerating the grievance. What is the position? The worst which would happen would be, not that we refused to redress a grievance, but that we should have to revert to the practice of quite recent years, even during the time I have been in Parliament. Most of these things were redressed, not by the Budget, but in Revenue Bills. That used to be the practice under Lord St. Aldwyn. The practice of moving every conceivable Amendment of the law on the Finance Bill is one which has been elaborated during recent years. I have no doubt it began in the days when we were in Opposition; at any rate, we helped it along; but it has never reached the dimensions which it has reached at the present moment. I remember the great all-night sitting we had, but we had nothing like the number of Amendments which are put down here. If we had only exercised our ingenuity we could have moved every conceivable kind of Amendment of the Income Tax Clause. No doubt in another two or three years we should have become quite expert at it, and covered cases like this. But the old practice undoubtedly was to leave points of this kind to Revenue Bills. Revenue Bills were never produced every year. They were produced once every three or five years. Undoubtedly there were grievances in the meantime which were left unredressed, but I wish they were as insignificant and as trifling as they are in this particular case. There has been only one case which has arisen of this kind at all.
§ Mr. LLOYD GEORGE
I have been making inquiries of those who administer the Department, and they tell me only one case has arisen at all. The right hon. Gentleman calls it a dispensing power, but he knows as well as I do what happens in these particular cases where there is an obvious grievance which is due to some kind of oversight, perhaps. This is not a practice which I initiated at all. I do not think it is a practice which ought to be too hastily condemned, because it has enabled the Revenue Department, without having to come to Parliament and wait five years for a Revenue Bill, in some cases to redress very harsh grievances which have suddenly arisen, and which no one could have foreseen. I say it is a very serious thing for the tax-payers, and certainly a very serious thing for those who have to administer the taxes. In this case the Revenue Department must look at the circumstances of harsh cases which occur constantly owing to some rigid technical interpretation of the law. This is not a new case. The right hon. Gentleman knows as well as I do—
§ Mr. AUSTEN CHAMBERLAIN indicated dissent.
§ Mr. LLOYD GEORGE
Perhaps that is the best way of putting it. These are things which the Chancellor of the Exchequer ought not to know, but undoubtedly they conduce to the smooth working of the Department. That is really what happened in this case. I cannot understand the Opposition making a grievance of this. Their grievance in 1909 was that I had introduced something which was not strictly speaking finance—that I had introduced all kinds of tacking proposals. Undoubtedly under the Parliament Act you have set up machinery which will deprive any Government of the opportunity of making proposals in a Finance Bill which are not strictly finance. You have set up a tribunal which is strictly impartial—the Speaker of the House of Commons. He decided last year that there were Amendments introduced which put the Bill outside the category of Money Bills, and we have been driven into the position that henceforth we run the risk of losing the benefit of the Parliament Act if we introduce any provisions which are not strictly finance. That is certainly not a grievance which the Opposition should state. They may press the 2594 Government to introduce a Revenue Bill, but that is another point. I am not complaining of that, but that is not the point of the right hon. Gentleman. It does involve undoubtedly a-return to the old practice of having a Finance Bill and a Revenue Bill, but it also involves the right of the Opposition to ask the Government to introduce Revenue Bills at the intervals at which they were introduced before. I think it was an infinitely better practice. What I say is just as much in the interest of the Opposition when they become responsible for the Government of the country. I am perfectly certain that there would then be simply no end of Amendments proposed in the form of new Clauses. There is no tariff to which you cannot move a thousand new Clauses. I forget who first departed from the old practice. I rather think that Lord St. Aldwyn, when Chancellor of the Exchequer, had Finance and Revenue Bills. That is my recollection.
§ Mr. AUSTEN CHAMBERLAIN made a remark which was inaudible.
§ Mr. LLOYD GEORGE
I should have thought that the Opposition would be the last quarter in the House to complain of our abiding by the effect of the Parliament Act. Whatever they may say about the Parliament Act, one feature of it which they should be the last to complain of is that it forces us, in order to obtain the full advantage of the Act, to strictly confine ourselves to finance. I am not saying this is not finance. I shall make some inquiry on the point. There is another Amendment on the Paper, and I warn the hon. Gentleman who has got it down that he had better make inquiries on the subject. He is contending that it would not take the measure outside the category of a Finance Bill, and I think it was accepted. It is conceded that this must also be in the same position, otherwise I shall have to consider the question of dealing with it in the next Revenue Bill. Of course, I cannot make any promise with regard to that, because that is a matter for the Leader of the House (the Prime Minister). But that is the position.
§ Mr. PRETYMAN
I wish to say one word about what the Chancellor of the Exchequer has said that the Opposition ought not to complain of what has happened in regard to the Finance Bill. Does he really mean that, because what is the history of these proceedings? Against the protests of the Opposition the 2595 Chancellor of the Exchequer introduced a valuation into the Finance Bill. We complain, and have very good cause to complain, and the Chancellor of the Exchequer says that because we complain that he introduced it into a Finance Bill we have no right to complain now when he refuses us the right to move an Amendment to the valuation in a subsequent Finance Bill. It is he who introduced the Valuation Clause into the Finance Bill and he must take the consequences. What is his consolation to us? Here we are in August, after discussing it until four o'clock o'clock this morning, now discussing a Finance Bill in the dregs of the Session, and our consolation is that we are to look forward in future to having a Revenue Bill as well as a Finance Bill.
This is the first Finance Bill which we have had the opportunity of discussing during the last three years. If we cannot get the opportunity of discussing the Finance Bill alone, how are we going to get the opportunity of discussing both a Finance Bill and a Revenue Bill? The Chancellor of the Exchequer knows very well that if we do not take the only opportunity of discussing the ridiculous complications inserted in the Bill on the former occasion, which are nothing less than a scandal in every direction, we shall have no other opportunity. We complain in the first place of his having inserted this valuation into the Finance Bill, and also that having done that he should challenge our right in any sense to deal with that which he has introduced into a subsequent Finance Bill. The real point at issue is simply this. A hardship has arisen. Surely that grievance ought to be dealt with at the earliest possible moment by this House. The grievance is admitted, and it is a most serious position for the Chancellor of the Exchequer, with all his responsibility to say that he admits the grievance; but because the remedy of this grievance might cause the Government some temporary inconvenience or loss of pride, therefore he cannot be quite sure as to what he will do. He will not say that he will not remedy it, but he says that he cannot remedy it now, but will require further time. When my hon. Friend puts down his Amendment again next Monday, I feel sure the Chancellor of the Exchequer can give only one answer.
§ Mr. CASSEL
In view of what the Chancellor of the Exchequer has said, I desire to withdraw my Amendment, 2596 and shall put it down again. The right hon. Gentleman has asked me to give him assistance on this matter as to whether this will bring the Finance Bill outside the scope of a Money Bill under the Parliament Act. I do not know how I am to give that assistance. The only thing that I can say is that if the original valuation Clauses were finance then any Amendments of them must be finance as well. So far as the Revenue Bill is concerned, the special circumstance here is that the valuation is going on. You do not say that you are to have the Revenue Bill every five years. The valuation is to be completed before we have an opportunity of putting forward the Amendment which we wish to submit. I think the right hon. Gentleman will recognise the special circumstance that the valuation is being made, that there are very complicated tenures, and very complicated provisions appending to it, and that circumstances might arise which necessitated some amendment. I submit it is fair, if there is to be a Revenue Bill every year, that there should be an opportunity of seeing that the circumstances are such as to justify some alteration. I shall be very pleased to withdraw the Amendment and move it again, although I do not know what kind of assistance I can render the right hon. Gentleman.
§ Proposed Clause, by leave, withdrawn.