§ Rule 9 of Schedule E of the Income Tax Act, 1918, shall apply to the assessment of the earnings of the Women's Land Army, and the amount expended by a member of the Women's Land Army on her board and lodging at or in connection with her place of employment may be deducted from the earnings to be assessed.—[Mr. Brooke.]
§ Brought up, and read the First time.
§ Mr. Brooke
I beg to move, "That the Clause be read a Second time."
My hon. Friend the Member for Thirsk and Malton (Mr. Turton), in whose name this new Clause stands on the Paper, has asked me to apologise to the Committee for his inability to be present at the time when it has come on. The Clause deals with the emoluments of the Women's Land 485 Army and calls attention to an anomaly which is apparent there as elsewhere. I will state it in general terms. A girl in the Women's Land Army may live oh a farm, in which case she will receive board and lodging from her employer and a salary in addition. Alternatively she may live out, in which case her money emoluments will be increased because she will receive a board and lodging allowance. Under the Income Tax Acts, if a person receives free board and lodging as part of his or her emoluments, no tax is chargeable on that part of the income which is income in kind, but if the same person, instead of living at her place of work, lives elsewhere and receives an additional allowance to cover the extra cost of her board and lodging that allowance, though it is to meet a quite definite expenditure, becomes taxable. I think the Chancellor will agree with me that not only in this case but in many other cases, the Income Tax law is operating inequitably between one person and another, in the sense that it is discriminating against those who receive board and lodging allowance. If board and lodging allowance were paid direct to a hostel where a woman lived, then that sum might not be included for tax purposes on the ground that it does not at any time pass through the taxpayer's hands.
There is another anomaly apparent in the difference between the treatment of the Women's Land Army and the treatment of the women's Services. I know that the Women's Land Army are civilians and the girls in the A.T.S., the W.A.A.F. and the W.R.N.S. are not. The Government use that argument to justify differentiation of treatment between them. But I do not think any of us are quite happy about this matter, and it is because my hon. Friend has had hard cases brought to his attention—and so have I, in another sphere—that we ask the Chancellor what he intends to do to remove the discrimination.
§ The Attorney-General
There is undoubtedly, and there has been for some time, an anomaly—if that is the right word—arising from the fact that if a person gets board or board and lodging, as part of the consideration for work, it is not evaluated in money and taxed as income. The first case that came before the court was that of a bank manager for whom accommodation was provided in 486 the bank. That fact was reflected in his salary. As between him and, say the headmaster of a grammar school living next door, one might have said that that was unfair and you would have upgraded the bank manager rather than scaled the other man down. Undoubtedly the vast bulk of people in this country pay rent after their income has been taxed. That is the general rule. In the special class of cases where somebody gets free board and lodging these people are really getting a windfall. The Royal Commission on the Income Tax suggested that, in the interests of the principles of logic, efforts ought to be made to see that board and lodging was assessed as income and so evaluated. That has never been done, partly because of the great practical difficulties and partly because it has been thought that it was better for a few people to be lucky rather than to introduce great complications.
Take the case of any domestic servant in the country. If you are really going to evaluate on logical principles what she is getting you have to take into account the fact that she gets free board and lodging. That might bring her above the Income Tax limit in these days. Take a man-servant. One man-servant may get so much a year, live in the house and have board and lodging free, while another man has a cottage and gets a larger sum, but has to pay rent for the cottage. It has been found impracticable to deal with the anomalies by scaling up one set of people and trying to assess the value of their board and lodging. The case of the Women's Land Army is simply one case in a very much wider problem and it was realised that my right hon. Friend could not tackle it, certainly not an the lines suggested in the proposed new Clause.
It always happens that when we are lucky we do not realise our good fortune nearly as keenly as we realise our bad fortune when we are unlucky. People in the Land Army or in any other walk of life who get free board and lodging or free lodging without board' are lucky, but it would be impossible to deal with the anomaly by putting everybody who has to pay for board and lodging in the same Income Tax position as the people who get board and lodging free. It may be true to say that some of the Service allowances are treated somewhat more 487 generously than corresponding allowances in civilian life, but nobody would want to alter that position in the middle of the war. My right hon. Friend has stated that when peace comes and the problem is considered again, it can be considered in the light of the position of those who, in the future, may be in the Services, and it may well be found that elasticity has been carried a little further than is fair, having regard to other members of the community.
§ Earl Winterton
I do not want to detain the Committee and I do not want an answer from the Attorney-General or from the Chancellor of the Exchequer to the question I have in mind. [An HON. MEMBER: "Then why ask it?"] Because it is desirable to call attention to the matter. The Attorney-General referred to other matters analogous to those arising under the proposed new Clause. Surely, in the future unless the Treasury devise some system in respect of this matter and of the analogous situation, a rather serious sense of injustice may be created. It does not seem to be a sufficient answer to say that this is the line the Treasury have always taken, because it is only within the last two or three years that this mass of wage-earners has come within this category. I imagine that after the war, whether the present basis of Income Tax is continued or not, some system will have to be found of differentiating between those who get the great benefit of living in and those outside, who receive the same wages. Otherwise, a sense of injustice will be created in the minds of the taxpayers.
§ Mr. Stephen (Glasgow, Camlachie)
The real remedy lies in restoring the position which existed with regard to Income Tax before there was this great extension of Income Tax payment. Among the Services, the girls in the Land Army have all along been treated as the Cinderellas and I suggest to the Treasury that, in the future, a sound way to deal with the anomaly will be to restore a much more generous exemption level.
§ Mr. Brooke
The Noble Lord is quite right. The anomaly, which the Attorney-General admitted, has become much more acute owing to the great rise in the level of Income Tax. I will not press the matter further on this narrow issue of the 488 Women's Land Army now, so I beg to ask leave to withdraw the Clause.
§ Motion and Clause, by leave, withdrawn.