§ 2.35 p.m.
§ [The Question was as follows:
§ To ask His Majesty's Government whether their attention has been called to the large number of persons who are endeavouring to provide for their old age by purchasing an annuity; whether they are aware that as the law stands at present the whole of the periodical payments received by the annuitant are treated as income and taxed accordingly, notwithstanding the fact that included in these payments is a return of capital; and in view of the unfairness of treating a return of capital as ordinary income, whether the Government will take steps to remove this hardship as has been done in like cases both in Canada and the U.S.A.]
THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM)
My Lords, ever since income tax was introduced in this country in 1799 by Pitt the Younger, annuities have been subject to tax in their entirety. These provisions of the law have been made the subject of detailed inquiries by numerous Committees since that time, including the Royal Commission on the Income Tax in 1920, but not one of these bodies has recommended any change in the law. It therefore remains to-day substantially the same as it has been throughout. I do not propose to go over the arguments for or against a change in the law, as I wish to remind your Lordships that another Committee is new considering this matter. In his Budget speech last year, Sir Stafford Cripps announced that he proposed to set up a Committee to consider various 810 aspects of the treatment for taxation purposes of provisions which people make to secure them benefits in their old age or retirement. This Committee was appointed last August under the chairmanship of Mr. Millard Tucker, K.C. In the circumstances, I am sure that your Lordships will agree that it would not be proper for His Majesty's Government to comment on the matter at the present time until this Committee has made its report.
§ LORD BROUGHSHANE
My Lords, while thanking the noble Lord for his reply, may I ask whether it would not be possible for the Government to inquire of Canada and the United States how they have found it possible to differentiate return of capital from ordinary income and to give annuitants the benefit, so that they are not taxed on receiving back the capital which they have put into the annuity?
My Lords, I will certainly mention that point to my right honourable friend, but I am sure that the Committee to which I have alluded will deal with all these matters in the fullest possible way.
§ LORD BROUGHSHANE
Can the noble Lord say when it is likely that the Report of the Committee will be published? Consideration has been going on for so long—the matter has gone from Committee to Committee and nothing seems ever to be done.
My Lords, I have told the noble Lord that the Committee was set up in August. I am afraid I cannot give him any more information about it at the moment.