§ (1) Section one hundred and thirty-three of the Income Tax Act, 1842, and Section six of the Revenue Act, 1865 (which provide for the reduction of assessments or the repayment of duty in certain cases where the profits of the year of assessment fall short of the sum on which the assessment has been made), shall, notwithstanding their repeal by Section twenty-four of the Finance Act, 1907, have effect as respects any assessment to Income Tax for the current Income Tax year where it is proved to the satisfaction of the Commissioners by whom the assessment has been made that the diminution of profits and gains on account of which relief is claimed under those Sections is due to circumstances attributable directly or indirectly to the present war, whether those circumstances are a specific cause of the diminution of income within the meaning of Section one hundred and thirty-four of the Income Tax Act, 1842, or not; and in any case where relief can be given un der this Section, the said Section one hundred and thirty-four shall not apply.
§ The foregoing provision, in its application to the case of any person who, in connection with the present war, is or has been serving as a member of any of the Military or Naval Forces of the Crown, or in any work abroad of the British Red Cross Society, or the Saint John Ambulance Association, or any other body with similar objects, shall be construed as if that provision referred only to Section one hundred and thirty-three of the Income Tax Act, 1842, and contained no reference to Section six of the Revenue Act, 1865.
§ (2) Where it is proved to the satisfaction of the Commissioners for the special purposes of the Acts relating to Income Tax that the actual income from all sources of any individual charged to Super-tax for the current Income Tax year is or will be less than two-thirds of the income on which he is liable to be so charged, he shall be entitled to postpone the payment of so much of the Super-tax payable by him as represents the difference between the tax payable on the income on which he is liable to be assessed and the tax which would have been payable by him if he had been assessed on his actual income; and any amount of which the payment is so postponed shall, subject to any provisions which may be made by Parliament, become payable on the first day of January, nineteen hundred and sixteen.1253
§ Mr. BUTCHER
I beg to move, to leave out the Clause.
I do this because I want to ask a question of the Government with regard to Super-tax and the new Sub-section introduced by the Government the other day. Supposing Super-tax is paid on the 1st January or shortly afterwards, and then, when the end of the year comes, namely, 31st March, it is discovered that the person who has paid the Super-Tax would be entitled to the concession given by this Clause, in other words, that he has paid a great deal too much Super-tax, I want to receive an assurance from the Government that in that case he would be entitled to the repayment of the amount he has overpaid?
§ Amendment, by leave, withdrawn.
§ Mr. MONTAGU
I beg to move, in Sub-section (1), to leave out the words "in any case where" ["and in any case where relief can be given under this Section"], and to insert instead thereof the words "diminution of profits and gains on account of which."
This is really little more than a drafting Amendment. Under Section 134 of the Income Tax Act certain relief is granted in the case of the death or bankruptcy of the Income Tax payer. It was the intention of the Committee, when it passed Clause 12 in its present form—that being in the new provision the re-enactment of Section 133—that if owing to reduced profits an Income Tax payer was entitled to relief he should not get the relief for those same reduced profits under Section 134. As the Clause is drawn, when a man has had relief under Section 133 as re-enacted, even if he died or was bankrupt, he would not have relief under Section 134. It was not intended to take the whole of that Section away, and therefore I propose to move Amendments so that the Clause may read, "and diminution of profits and gains on account of which relief can be given under this Section shall not be deemed to be a specific case authorising the grant of relief under the said Section 134." The 1254 effect of that will be that the Income Tax payer will not be entitled to double relief, but he will still have the rights in other circumstances which Section 134 gives him. It is little more than a drafting Amendment, but it ensures the Income Tax payer against hardship.
§ Amendment agreed to.
§ Further Amendments made: After the word "Section" ["can be given under this Section"], insert the words "shall not be deemed to be a specific case authorising the grant of relief under."
§ Leave out the words "shall not apply."—[Mr. Montagu.]
§ Mr. BUTCHER
I beg to move, at the end of the Clause, to add the words,Provided that during the continuance of the present War, no duty of Income Tax shall be levied on or payable out of the pay of any person serving in the Naval or Military Forces of the Crown.I propose to confine this exemption, so that it will only last during the continuance of the War. There was a proposal made in Committee that officers of the Navy or Army should be totally exempted from Income Tax in respect of their income. That was negatived. My proposal is far more limited in character. What I propose is, that they shall not be called upon to pay Income Tax in respect of the pay which they receive as officers. I do not think that is a very excessive demand to make in favour of the men who are fighting our battles, or indeed in favour of that comparatively limited number of men who remain at home—officers of the Navy and Army—who have to work under exceptional strain and have to put in an amount of work far beyond that which they ever do in times of peace. As regards our fighting men, I suggest that they already make a splendid contribution in their heroic services, their sufferings, their hardships, their dangers, and often in giving their lives. It is not reasonable that in addition to that special contribution they should be also asked to pay an increased contribution this year out of the relatively small income which they get by way of pay towards the cost of the War.
This is not a time when our officers ought to be asked to make any deduction from their pay when they are already rendering these services. The duty of meeting the expenses of the War ought, 1255 in my judgment at any rate, mainly to fall upon those who are staying at home and those who, for one cause or another, are unable to serve their country in the field, and I feel confident that practically the entire mass of the population who stay at home would be only too glad to pay the small additional taxation which would fall upon them if the Treasury would give this relief to the officers who are fighting our battles. There really seems to be an exceptional hardship in asking them to pay Income Tax out of their pay at present because you have this result. Not only have they all the hardships of the War to suffer, but they are called upon to pay 2s. 6d. in the £ out of their income in addition to suffering these exceptional hardships and rendering those splendid services which they give to the country. It is certainly right that they should be relieved of the extra expense, the doubled Income Tax which falls upon other Members of the community, and it is right that they should be relieved of the whole of the Income Tax, at any rate, so long as the War goes on.
Then what is the official answer? This suggestion was made on the Second Reading, and the official answer seemed to me to be exceedingly feeble, ineffective, and inconclusive. They said these officers will get extra pay. An Army Order has come out to-day. I have not had time to study its effect, but undoubtedly it gives additional pay to officers up to the rank of captain. No additional pay is given beyond that rank except, I think, in the case of majors of the Army Service Corps. I am not saying whether the increase of pay is adequate or not, because I have not studied it. Let me assume that it is perfectly adequate. It is in fact long overdue. It has been admitted time after time in times of peace that the pay of these Army and Navy officers is entirely inadequate, and when this tardy act of justice is rendered in favour of a limited class of officers, we are asked to say this is entirely sufficient for them as a recognition of their services.
This increase of pay, such as it is, is an increase to which they were entitled in peace time, and it is quite idle to say it is any adequate recognition of their services in war or constitutes any reason whatsoever why you should not give them this special exemption, so long as the War lasts. They have been entitled for many years past to this concession as 1256 regards pay. The matter now comes under consideration, and quite apart from the question of the amount of their pay, the question arises whether they should not receive their pay during war time without this deduction for Income Tax. I do not know how much it will cost the Treasury. I do not suppose it can be a very large sum, at any rate relatively to the enormous sum which this War is costing us, and which we shall have to spend before we bring it to a successful issue. Not merely as an act of justice, but as an act of recognition of the exceptional way in which our troops have distinguished themselves in this War, the Government, might meet the case and grant this exemption to men who certainly, whatever else they have done, have done worthy service and proved themselves to be worthy of the deepest gratitude of the country.
§ Mr. MONTAGU
I regret to have to undertake the very disagreeable task of endeavouring to persuade the House not to pass this Amendment. I am sure the hon. and learned Gentleman will understand that it is not because of any lack of appreciation of the services rendered by those upon whose behalf he speaks, but it is rather from a belief that that consideration hardly enters into it at all. The services they are rendering are not services which we can recognise by small sums of money. As a matter of fact, what the hon. and learned Gentleman really seeks to do is to increase the pay of officers. It always seems to me to be a far better principle, rather than let off from a particular tax a particular part of our Army, that the right way to accomplish the same object is to increase their pay. It was with the view of doing that that the Army Orders were published this morning. The cost to the taxpayers during the War will amount to £1,150,000 a year, a far greater boon to officers than this Amendment would represent. If the hon. and learned Member thinks that even that is not sufficient, I would most respectfully suggest to him that it would be a far sounder principle on which to go to urge upon the House at the proper time that they should get a still further increase rather than to suggest that while the soldiers have to pay taxes on their beer, tea and tobacco, a certain portion should get off the Income Tax. The Committee did, on the recommendation of my hon. and learned Friend the Attorney-General yesterday make a concession in regard to 1257 the Income Tax. We have generously increased the pay as announced this morning, and I venture to suggest that the House would do well to leave the matter there and not accept this Amendment.
§ Mr. MONTAGU
I simply gave the figure for the extra cost which will be entailed during the War. It is very difficult to estimate what it will cost after peace comes. That will depend on the strength of the Army.
§ Amendment, by leave, withdrawn.
§ Bill to be read the third time To-morrow.