§ (1) Notwithstanding the provisions of Section forty-two of the Finance Act, 1927, where an assessment has been made of Surtax on any taxpayer who has died before 1272 the date on which payment has become due, such assessment shall be discharged upon proof by the executors that the deceased had been continuously assessed for Super-tax or Surtax since the date of the taxpayer's liability arose under the Finance Acts, 1909, 1914, 1918, 1920.
§ (2) The Special Commissioners shall, on the application of the executors of the deceased person upon whom a claim for Surtax has been made, furnish to the executors a certificate showing the period for which the deceased was liable and had discharged his liability.—[Sir H. Buckingham.]
§ Brought up, and read the First time.1273
§ Sir H. BUCKINGHAM
I beg to move, "That the Clause be read a Second time."
It has generally been accepted in the Debates which we have had on the Surtax question that all Surtax payers are in the same category, but I shall endeavour to prove to the Committee that that is not so and that one section, at any rate, of Surtax payers are very much imposed upon by the new taxation. I use the term "imposed upon" in the sense that they will ultimately have to pay more taxation than they are liable for and that, I think, is a, proposition which Members of all parties will agree is very unjust from the point of view of the taxpayer whether he be rich or poor. For the sake of brevity and clarity I will ask the Committee to allow me to read a statement which I have written showing exactly how this payment will be made. Payers of Surtax must be divided into two distinct groups whereas in our discussions upon this matter it has generally been assumed that they all belong to the same category. The two groups are first, those who grow into Surtax payers, that is to say those whose incomes gradually increase until they become Surtax payers and, secondly, those who have been Super-tax payers from 1909 when the Super-tax was first imposed and who have been continuous Super-tax payers from that time onwards but who now become Surtax payers. This second group also includes those who first became liable to Surer-tax in 1914, 1918 and 1920 when the minimum amount of income liable to Super-tax was altered but for the sake of brevity I will refer to these four sections of Super-tax payers as original Super-tax payers.
The first group of Surtax payers will, under the Surtax Regulations, pay, or their executors, will pay, Surtax upon the exact amount of Surtax income for which they have been liable, whereas hitherto Super-tax payers in this category, or their executors have paid upon one year's less Super-tax income than they have enjoyed. On the other hand, original Super-tax payers or their executors have always paid upon the exact number of years' Super-tax they have enjoyed. This difference comes about owing to the fact that original Super-tax payers paid tax upon the in- 1274 come of the year previous to the year in which they first became liable, whereas the Super-tax payer who has grown into Super-tax commenced to pay tax upon the income of the year in which he first became liable. The result, therefore, of the imposition of Surtax Regulations upon original Super-tax payers, is that these tax-payers, or their executors, will pay upon one more year's Super-tax income than the number of years for which they have been liable, owing to the fact that, having paid upon the income of the year previous to the one in which they first became liable, there will now be added the tax upon the income of the year in which they die. Thus if you take the case of an original Super-tax payer who still remains a Surtax payer, who may die upon the 5th May, 1930, it will be found that he will pay upon 22 years one month's income, although he has only been subject to liability for 21 years and one month.
That statement, I think, is accurate and I hope it puts the question fairly before the Committee. I certainly hope that it proves that the original Super-tax payer now the Surtax payer, will have to pay one year's more tax compared with the number of years for which he is liable. If that be so and I think the Chancellor of the Exchequer will have to admit it how can the right hon. Gentle-man reconcile that circumstance with a refusal to accept the New Clause which I now propose. In a statement made by the ex-Attorney-General last year—and we must remember that it was upon his statement that the House of Commons accepted these taxes—he said:Surtax is going to be levied in every case for exactly the number of years for which a person is liable to pay it."—[OFFICIAL REPORT, 30th June, 1927; col. 751, Vol. 208.]I hope I have satisfied the Committee that, having regard to the Regulaions in regard to Surtax which now exist, the ex-Attorney-General quite unintentionally deceived the House of Commons when he stated that no one would pay tax upon any year's income for which he was not liable. It is possible that the Chancellor of the Exchequer may argue that the income of 1908, the year previous to the imposition of the Super-tax, was liable to taxation. If that be the case, I ask him whether he disagrees with the statement made by the right hon. Gentleman, 1275 the Member for Spen Valley (Sir J. Simon), a Member whose knowledge of the law in these matters is unrivalled, when he said:It is, therefore, quite inaccurate to say that Super-tax is charged in respect of the Income Tax of a previous year. It is not. It is charged in respect of the income of the year of charge."—[OFFICIAL REPORT, 27th June, 1928; col. 612, Vol. 219.]I wish the right hon. Gentleman were here so that the Chancellor might cross swords with him if he proposed to disagree with him. The Chancellor either has to say that the right hon. Gentleman is entirely wrong in the opinion which he expressed, or he must admit that the original Super-tax payer will, if the Surtax Regulations pass the House, pay upon one more year's income than the number of years for which he has been liable for the tax.
§ 9.0 p.m.
§ Mr. CHURCHILL
My hon. Friend has invited me to say that the right hon. Gentleman the Member for Spen Valley (Sir J. Simon) is wrong. I would not hesitate for a moment to do that if I thought he was wrong, and I never did it more frequently than when we were colleagues of the same Government. Let us see what is the proposal of my hon. Friend. Really, I am a little surprised that with his immense knowledge of the Income Tax he should have allowed himself—in fact, he has allowed himself by his immense knowledge—to be drawn into what most people will regard as a very absurd fallacy. The Committee has just decided by a very large majority that the procedure in regard to Super-tax is to be assimilated to the procedure which has long been adopted in regard to Income Tax. I do not disguise the fact that hard cases might arise. There is the case of a man who all his life hap struggled, and at the end of his life produces, say, his first successful book, or invention, or has his first good year of business, and then he dies, and the high income which he made in that year undoubtedly becomes, through the taxation upon it, a charge of a serious character on those he leaves behind. But the House, on the advice of the Government, has rightly decided that that hardship is no more a hardship than what individual taxpayers below the Super-tax level have always endured in similar circumstances. On these grounds, the House has accepted the Government's 1276 proposal. My hon. Friend, with very fine argument and logic, arrives at the conclusion that, while it is quite all right that the estate of a man who, only in the last year of his life managed to reach the Super-tax income level, should have to pay the outstanding tax, as the House has decided, that of a man who for 20 years has enjoyed a Super-tax income should be given some special privilege. No proposition could be more removed from reason in the result, however logical the argument may have been to arrive at it. Why should a man who for 20 years has enjoyed a Super-tax income, be treated better than the man who, at the end of his life, has at length arrived at the Elysian fields of Super-tax? Why should you in broad justice treat the man who for 20 years has had a Super-tax income, better than the man who has had to struggle with fortune and only in the last year of his life has reached a Super-tax income? I have paid this objectionable impost since its introduction, and the man who has paid it for 20 years ought to be accustomed to make provision for it as far as he can, and as far as the wickedness of the Treasury allows, every year. But to say that such a man who has had this opportunity and neglected it, after having enjoyed a Super-tax income for 20 years, should lie treated better than the man who in the last year of his life has arrived at it, is a proposition which the Committee cannot entertain, and which if it did entertain, would introduce a ridiculous element into the whole theory of Super-tax.
§ Sir H. BUCKINGHAM
In view of the apparent inability of the Chancellor of the Exchequer to understand the Clause, and the total disregard which he has paid to the very vital question of arithmetic, I do not think that it is fair to him to ask the Committee to divide on this Clause, and I beg to ask leave to withdraw it.
§ Question, "That the Clause be read a Second time," put, and negatived.