§ Sir H. BUCKINGHAM
On a point of Order. I have two Amendments down to this Clause, the one to leave out the Clause altogether, and the other to insert certain words. It seems to me that I should be rather putting the cart before the horse in moving the Amendment and then moving that the Clause be deleted. Should I be in order in moving first to leave out the Clause?
§ The CHAIRMAN
No. The hon. Member should move his Amendment first, and then he can speak against the Clause standing part of the Rill.
§ Sir H. BUCKINGHAM
I beg to move, in page 13, line 26, at end, to add(3) Proceedings under this Section for recovery of Income Tax summarily as a civil debt shall not be taken unless application has first been made to the General Commissioners and their approval obtained and unless the collector shall have produced to such Commissioners the names of the taxpayers against whom he wishes to take proceedings.My reason for moving this Amendment is that this Clause, which is framed for the purpose of giving the revenue authorities entirely new and much larger powers than they now possess, states, in Sub-section (2), thatProceedings under this Section shall be commenced in the name of a collector of taxes.I presume I am right in believing that any proceedings would not only be taken 1420 in the name of the collector of taxes, but at the discretion of the collector of taxes, and I beg to suggest to the Committee that to allow a collector of taxes to use arbitrarily, at his own discretion, the very great powers which this Clause would confer upon him, is really insulting the taxpayer. Already powers are given to the collector by the Commissioners of Taxes to go as far as distraining upon a person who does not pay his tax, but these much greater powers will enable him, entirely on his own authority, to take an inoffensive person to the nearest police court, hale him before the magistrates, and subject him to all the unpleasantness of proceedings in a police court, with the stigma which does attach to such proceedings. It will be possible for that to be done entirely on the discretion of the collector of taxes. If I may speak afterwards on the general effect of the Clause, I will limit my remarks now to what I have said, and ask the Chancellor to accept a much more reasonable suggestion, namely, that these proceedings, if the Clause is ultimately passed, shall only be taken after application has first been made to the General Commissioners and their approval has been obtained. That is what happens now when a collector is empowered to distrain upon the taxpayer. Before a collector can distrain, he has to receive the authority of the General Commissioners to do so, and I suggest that in this case also, if these powers are given to the Revenue Authorities, the collectors, who are appointed by the Commissioners, should receive the very natural approval of those Commissioners before taking action.
I feel sure that, after the explanation which I hope to be able to give to the Committee, the hon. Member will not find it necessary to proceed with this Amendment. The Committee will be aware that, very largely because of the increase in the Income Tax within recent years, there is, and has been for a long time, a large problem of arrears, and, of course, it is the duty of the Inland Revenue Department, in justice to other taxpayers who have done their duty, to see that the arrears are recovered, more particularly when the people involved are able to pay.
§ Sir H. BUCKINGHAM
On a point of Order. I have purposely, Mr. Young, on your instructions, confined my remarks 1421 to the Amendment; but the Financial Secretary, if I may say so, is suggesting that the Clause itself is justified. If he is going to take that point of view, I suggest that I might be allowed to speak on the merits of the Clause itself.
§ The CHAIRMAN
I think the Financial Secretary will confine himself to the Amendment as far as possible.
I am quite sure that, if the hon. Member had borne with me for a minute, he would have seen that I should have got quickly to the point. In any case, he will be aware that in Committee he is entitled to speak as often as he can catch the eye of the Chair. I have described the problem of arrears, and, in addition to that, as regards weekly wage-earners in this country, there is a power of summary recovery as a civil debt. That, however, is not the position as regards other classes in the community. In their case there is a power of recovery by distraint, and also a power of recovery by reference to the High Court. In many cases recovery by distraint is obviously quite inappropriate, and in many cases it produces nothing, so that there remains only the very costly procedure of the High Court, and all that it involves.
We propose in this Clause—and I find it necessary to say something about the Clause in order to make my reply clear—to put weekly wage-earners and all other classes of the community, up to an amount of £50, on the same footing, and to make it possible to recover by summary jurisdiction. The hon. Member's suggestion is that that should only be done after reference to the General Commissioners, but may I remind him of the power of recovery which is granted by the General Commissioners, and also of the fact that they themselves fix the assessment? It seems to me, therefore, to be altogether unnecessary, in the light of these facts, that the collector should have to go and say to them, at meetings which must be specially summoned for the purpose, "A.B., C.D., E.F., and so on, are in arrear with their Income Tax; will you give me permission to proceed by this method of summary recovery?" I cannot believe that the. General Commissioners of Income Tax in this country, busy men as they are, are going to thank any one of us in the House of Commons if we impose upon them a duty which is perfectly unnecessary, because they could 1422 only say to the collector who had laid the facts before them, and who, moreover, has to show that the party in arrears is able to pay: "Proceed with your method of recovery by summary jurisdiction." That is all that they could say. I venture to suggest that, in the circumstances, there can be no injustice to the individual, and no bureaucratic danger such as the hon. Member has suggested. On that account the Amendment is unnecessary, and I hope it will not he pressed.
§ Sir HERBERT NIELD
Surely, the Financial Secretary has forgotten—perhaps because he is a Scotsman—that in this country it is customary for rate collectors to have the authority of their finance committee to take proceedings? Lists of defaulting ratepayers are submitted to the Committee, and they authorise by their signature that the men referred to in those lists shall form the subject of an application for summons. The lists are brought before the Petty Sessional benches, and the magistrates, acting upon those lists, grant the summonses. The summonses take a long time to make out, and they are sometimes even prepared by the rate collectors themselves and presented to the magistrates for signature. Why should not what is desired here, and what has been the practice for a great number of years in regard to local rates—and now that the poor rate is merged in the district rate it is all the more satisfactory—why should not that apply equally to the collection of arrears of Income Tax? I quite agree that there should be a summary method, but that is not the point. The point is that the names should be quoted in a list, and there should be specific authority, from the persons entitled to give it, to apply for summonses, in order that the procedure may be put into proper form. It seems to me that that, is not unreasonable, and it would prevent any isolated act on the part of the tax collector, who might he actuated by other than the ordinary official motives.
§ 8.0 P.M.
The difficulty I see about the Amendment is that the Commissioners would surely be in no position to judge the merits of the case except on the report of the collector. Therefore I do trot think the Amendment would 1423 really get us out of the danger which my right hon. Friend has just mentioned. The collector might bring up cases from improper motives where it would be undesirable to take action. I think really that is an argument against the whole Clause.
The other cases are cases that were examined by the Committee that authorised the action to be taken. I think it would be very difficult for the Commissioners to have sufficient knowledge of the cases and I should have thought the hon. Gentleman's argument really was against the Clause as a whole, and that if there is this danger his proper course is to oppose the Clause.
§ Mr. SNOWDEN
The effect of the Clause is to apply the practice which is in operation now in regard to the other cases. The right hon. Gentleman below the Gangway has described most accurately the present method of procedure in regard to the recovery of Income Tax arrears.
§ Sir H. BUCKINGHAM
The Financial Secretary made reference to quarterly assessments and placed the powers for the new form of collection upon the same basis. But he knows perfectly well that if he wants to make a mistake from the point of view of the collection of Income Tax he will increase the method of the quarterly assessments. It is well known that the result of the quarterly assessments is hardly any more than the expense caused in collecting them. He has weakened his case very much by saying he is anxious to establish a still greater series of collections on the same basis as that on which the quarterly assessments are now collected. My right hon. Friend is perfectly correct in saying that they can only be collected in this way subject to the consent of the superior body, and I cannot imagine that this House of Commons will consent to a Collector of taxes having the supreme and only power to drag a man into the police court for payment of debt. It is hardly conceivable that some sort of restraint should not be put upon such a person. The collector of taxes, a very desirable and necessary person, is appointed by the Commissioners of Taxes. The suggestion of this Clause is that such a person should 1424 have supreme power to take summary action against any number of individuals for non-payment of Income Tax, and I can hardly believe it possible that this Committee will refuse to grant some control over him. I intend to take the Amendment to a Division because it is to me so obvious that some sort of control, if not that which I have suggested, must be imposed upon anyone who has such very great powers as this Clause would give.
§ Mr. D. HERBERT
As far as I can see, it is not very likely that the Chancellor of the Exchequer has a very rooted objection to the Amendment, and I should like to say a word in support of it. One argument put forward was that the General Commissioners would do nothing but receive the lists from the collector and sign them, and would not know anything about the details. Speaking as a Commissioner myself with considerable experience in that capacity, I do not think that is an argument which can fairly be put against the Amendment. The Commissioners know their tax collectors, and they will know in many cases whether the collector is one whose list they can reasonably accept There are certain tax collectors who have one kind of reputation and others who have another kind, and if and so far as it may be necessary for the Commissioners to go into individual cases, they have a very efficient assistant in the person of the clerk to the Commissioners. I imagine that what the Commissioners would do would be not really to take the collector's list and say, "Is this all right" but to say to him, "You must submit your list to our clerk." They would instruct the clerk to go through it and they would take his advice in the first instance as to whether the authority should be given or not. Unless there is some very much stronger objection to the Amendment than I have heard yet, I hope the Government may be inclined to accept it.
§ Mr. SNOWDEN
This, after all, is not a very important matter, and I do not want to stand on the strict letter of the Clause. I will give further consideration to the question between now and Report.
§ Sir G. COLLINS
I understand the Clause itself gives the collector of taxes certain powers which apply to-day only to the weekly wage earner. I rise to ask whether the concession, if it be one, or the 1425 advantage, if it be an advantage, to the other type of Income Tax payer will also be granted to the weekly wage earners so that they and the other classes may receive the same treatment from the collectors of taxes in different districts.
§ Sir ELLIS HUME-WILLIAMS
Did I understand the right hon. Gentleman to say that the Income Tax Commissioners are going to consider in all these cases whether the person in default could pay and had not paid or that proceedings will be taken because of the mere fact that the man is in arrear. I understood him to say the procedure would be that the person taking the proceedings would have to be satisfied that the defaulter could pay although he had not so done.
I should not imagine the General Commissioners could go into a question of that kind. I should imagine that if the Amendment were carried the collector could only give a list of people who were in arrear. I think we had better leave it at the promise my right hon. Friend has made further to consider the Clause. As regards the proposal made by the hon. Member for Greenock (Sir C. Collins), I have no hesitation in saying that I hardly think we should be called upon in any circumstances to interfere with the existing arrangement as regards weekly wage earners, because the whole purpose of the Clause is to put other classes of the community on the same cheap and economical basis. I cannot hold out any hope in the direction of a change there. It is the other and the wider point which will be considered between now and Report.
§ Mr. GREAVES-LORD
As the Clause stands, suppose there was a man whose Income Tax came to considerably more than £50, but owing to difficulties he was not able to pay the whole at once, though he had reduced by considerable payments, the amount owing to less than £50. It would be open to the tax collector under this Clause, the very day after the taxpayer had reduced the amount due and payable to under £50, to commence proceedings in a Court of Summary Jurisdiction for the remainder. I cannot help thinking if the collector put a list before the Commissioners they might very well say, "This man has apparently had some difficulty. When did he last make a payment?" and if the 1426 collector said, "Only two days ago he made a payment of £100," the Commissioners would at once say, "This is obviously oppressive. The man is doing his best to pay, and under the circumstances it is quite improper to issue a summons. "There may be a number of instances of that kind. The Commissioners might ask who and what the man was and what his position in life was reputed to be, and might take a general consideration of the matter. I cannot think any collector of taxes under these circumstances would give incorrect answers or false in formation, but what you would obtain would be the judgment of someone who was not directly interested in the collection upon the question whether the time had come for summary proceedings to be taken. I think that is an extremely valuable matter, and I hope the Chancellor will seriously take it into account.
§ Mr. MACKINDER
May I ask the Financial Secretary to the Treasury if the tenour of his reply is that summary action can be taken against a weekly wage earner, while in the case of those whom the new Clause is intended to cover, their names will be sent to the Commissioners, who will decide on the ability or otherwise to pay, while in the case of the weekly wage earner the decision will be taken by the collector?
§ Sir H. BUCKINGHAM
We do not want any increase of these quarterly assessment methods. I thank the Chancellor very much for the way he has met me in this matter, but may I utter one word of warning? Obviously the suggestions which will be put before the House on Report will come from the Inland Revenue Authorities, of course, subject to the Chancellor's decision. I should like to warn him that obviously the attitude of the Revenue Authorities to the Amendment will probably not be of a very friendly nature, because I am sorry to say undoubtedly there is a tendency—and Somerset House would be the first to admit it—to encroach upon the privileges and responsibilities of the General Commissioners. When the Chancellor puts this matter before Somerset House authorities I hope he will point out to them that this is not a matter in which the House desires anything but the continuation of the authority of the General Commissioners. With that in my mind I 1427 shall only be too happy to accept the Chancellor's offer. I may take it that on the Report stage the same Clause will appear with some Amendment proposed by the Government.
§ Mr. SNOWDEN
No, I think that the hon. Member is assuming rather too much. I gave no definite promise that I would put down an Amendment. What I did say was that between now and the Report stage I would take into consideration what had been said in the course of the Debate, and that if I think that some Amendment is desirable and practicable then we will deal with it.
§ Amendment, by leave, withdrawn.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Sir H. BUCKINGHAM
This Clause gives greatly increased powers to the Inland Revenue authorities. It is aimed exclusively at the smaller Income Tax payer. As the hon. and learned Gentleman reminded us just now, it might apply to some persons who are paying on large assessments, but, broadly speaking, I think that it is aimed at screwing up the collection of tax from the smaller taxpayer. If that be so, then, in my opinion, such powers are unnecessary. I consider that the small taxpayer, the man with from £500 a year up to £1,000 a year, is the man who has suffered more than any other from the great increase in income tax. As a body, people of that class, I believe, are anxious to pay, and that they should be whipped up like this is rather a scandal, when we know that an enormous amount of Income Tax and Super-tax is outstanding, which the Government have brought forward no measures to collect. If they had brought forward measures for speeding up the collection from the large Income Tax payer, and still more if they had brought forward measures for the collection of Income Tax from those who are at present 1428 evading the payment of Income Tax, we should all of us have supported it, but here, curiously enough from the Socialist benches, we have these stinging proposals for still further screwing up the small Income Tax payer, who at present is put to it very hardly to pay any taxes at all.
For that reason I think that these powers are entirely unnecessary. I do not know whether the Chancellor will be able to say that the arrears of Income Tax among persons of this class are very large or are not. My own impression, from what I have heard, is that the great arrears of income Tax are not from these smaller taxpayers at all, but from the large taxpayer, and I fail to see why the Government should make this demand for fresh powers. That is from the point of view of the taxpayer, but I want also to urge that the Clause should be deleted for an entirely different reason. From the point of view of the revenue itself I consider that the Inland Revenue authorities are making a great mistake in bringing forward this suggestion at all, for this reason. As I pointed out just now, tax collectors, under authority from the Commissioners, can distrain and collect the money due. Under these new proposals the tax collectors might take those who are in arrears to the Police Court and collect the money in that way. We all know how merciful most magistrates are in matters of payment of debt, and it seems to me that if the Inland Revenue authorities are not very careful they are going to make themselves very ridiculous in this matter. A man owing £50 Income Tax will be hailed before a magistrate. He will put forward a very plausible story to the effect that he is very hard up and cannot pay. The magistrate very likely will make an order for £1 a week. As that will happen in numberless cases the position of the Inland Revenue authorities will be ridiculous.
Instead of collecting the money they will have an enormous number of cases brought before these Courts, and probably an enormous number of judgments will be given for small weekly payments which will make the collection of Income Tax impossible and ridiculous. Not only that, but it will also make the work of the collectors collecting those taxes impossible. At the present time, I can assure the Committee from a great deal of experience, the collectors of taxes are 1429 very much overworked—I do not say everywhere, but certainly in London and in the larger centres—and if you are going to place upon the shoulders of these men not only the responsibility, which we have already been discussing, in this matter, but also the work of continuing to keep after large numbers of taxpayers who are in arrear with their taxation in the way which they have to adopt in the case of the quarterly assessments I am very much afraid that this whole system of collecting taxes in many districts will break down entirely. Therefore I suggest, not only from the point of view of the treatment of the small taxpayer, but also from the point of view of general benefit to the revenue that the Government will be well advised to withdraw this Clause.
May I offer a word or two in reply to the criticism of this Clause by the hon. Member for Guildford (Sir H. Buckingham). I think that on consideration he would hardly press some of the arguments which he has just employed, because the whole object of this Clause is first of all to protect taxpayers as a whole against people who are evading payment but who, because of the peculiar position of the legislation at the present time, go on for very long periods without paying at all. May I explain, as regards the weekly wage-earner, that there is this power of recovery by summary proceeding, and all we are doing under this Clause, which was one of the definite recommendations of the Royal Commission on Income Tax, is to extend that summary procedure up to amounts of £50 in order to get rid of difficulties which arise in the method that is now followed.
I would like to make clear to the Committee that the two remedies at our disposal in the case of large numbers of professional and other people, who do not form the wage-earning class, are, first, distraint, and, if that cannot be employed, there is always the remedy of taking the case to the High Court, with the expense and the other complications that are necessarily involved. As far as we can work the system of distraint, that is the method adopted, but many of these people change from address to address, and they have nothing against which a distraint can be levied with any practical effect. That being so, the only protection for the great mass of the other taxpayers who have done their duty is to resort to 1430 the High Court, which entails obviously expense to the Inland Revenue on the one hand, and to these small people when they are called upon to make payment of costs on the other. In point of fact, under our Clause this is a substantial benefit to, people who are in arrears, but at the same time it is a protection for the community as a whole. I do not think the Inland Revenue authorities in this country can be charged with hounding down people who are in temporary difficulties, when I remind the hon. Member that this action can only be brought into being after very considerable delay has already taken place, a delay with which the taxpayers are familiar. They have the protection of that delay at the present time, and in any case they would still have the protection of a refusal by the Justices to take action of this kind unless the authorities were satisfied that they were in fact able to pay. The hon. Member who advanced this Amendment made reference to the evasion of Income Tax and to the arrears of Income Tax, and on both subjects, of course, many of us have taken a strong line in this House in the past, but surely, if we are going to deal with evasion of Income Tax, we want to be perfectly just in the remedies which we introduce, and we must say to the small taxpayer who can pay equally as to the large taxpayer who can pay. "You are called upon to do your duty under the law." I am sure that in operation this Clause, by putting the smaller taxpayers on a uniform basis, will operate for their benefit, and certainly for the benefit of the national revenue as a whole.
§ Mr. LAVERACK
There is something to say from the standpoint of the collectors of taxes themselves. They are an estimable body of gentlemen who do their duties splendidly. They are thoroughly underpaid, but that is another matter. It seems to me that this particular matter should be viewed, not merely from the standpoint of the hon. Gentleman who moved the Amendment, but from that of the collectors of taxes themselves. These gentlemen are not permanent officials, to begin with. They are not permanent members of the Civil Service, but they are appointed from year to year, and they have very varied duties to perform. They are not only collectors of taxes, but in some cases, particularly in country 1431 districts, many of them have four, five, or six other duties to fulfil. Under such circumstances, the suggestion that these gentlemen should have additional responsibility put upon them, the very grave responsibility of instituting proceedings against people who have not paid their Income Tax, and particularly the poorer people who have not been able to fulfil their obligations, is a very serious one. It would be better, in my opinion, if, instead of putting the screw, not only on the people who owe the Income Tax, but upon the collectors of taxes themselves, we were rather to relax, so far as the collectors are concerned, than otherwise.
It has been hinted that to some extent there is a temptation in these matters. Some of these collectors receive very poor remuneration indeed, and I heard of one only the other week who was in receipt of the magnificent remuneration of something like £12 a year. It is perfectly true that in many cases they would not dream of instituting proceedings, but, on the other hand, we have all heard of cases in our own constituencies where, for one reason or another, certain people have incurred a little bit of odium, it may be, so far as rate and tax collectors are concerned, and in those cases it is quite possible that a tax collector might he strongly tempted, instead of going to further trouble, immediately to issue summary proceedings. That is a matter that never ought to be put into the hands of a collector of taxes, especially under present conditions. At any rate, he ought to be a permanent civil servant, and he ought also to be in receipt of reasonable remuneration for the tremendous responsibility that he incurs. Taking one thing with another, it seems to me that the whole question is one that ought to be viewed with a great deal of anxious care, and I for one, consider that any departure from the present satisfactory procedure should be viewed with grave misgiving.
§ Clauses 23 (Extension of s. 18 of Finance Act, 1923) and 24 (Continuation of 21 of Finance Act, 1923) ordered to stand part of the Bill.