Income Tax for 1925–26.) (Hansard, 15 June 1925) Search Help HANSARD 1803–2005 → 1920S → 1925 → June 1925 → 15 June 1925 → Commons Sitting → FINANCE BILL

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Income Tax for 1925–26.) (Hansard, 15 June 1925) Search Help HANSARD 1803–2005 → 1920S → 1925 → June 1925 → 15 June 1925 → Commons Sitting → FINANCE BILL 11/8/13 CLAUSE 12.—(Income Tax for 1925–26.) (Hansard, 15 June 1925) Search Help HANSARD 1803–2005 → 1920s → 1925 → June 1925 → 15 June 1925 → Commons Sitting → FINANCE BILL. CLAUSE 12.—(Income Tax for 1925–26.) HC Deb 15 June 1925 vol 185 cc69-135 The following Amendment stood on the Order Paper in the name of Mr. LEES-SMITH: "In page 8, line 18, to leave out the words "year 1925–26," and to insert instead thereof the words "six months beginning the sixth day of April, nineteen hundred and twenty-five." The CHAIRMAN The Amendment standing in the name of the hon. Member for Keighley (Mr. Lees-Smith) is one which I do not select. Motion made, and Question proposed, "That the Clause stand part of the Bill." Captain BENN It was quite impossible for us to hear your ruling, Mr. Chairman, and would you kindly tell us what it was? The CHAIRMAN I said that the Amendment to this Clause was one which I should not select. Captain BENN Have you considered an Amendment handed in this morning to reduce the rate of the Income Tax from 4s. to 3s. 9d. in the £? The CHAIRMAN I have not received the Amendment referred to, but in view of the fact that it might very well have been placed on the Paper, it is not one which I should select. Captain BENN What is the right method in order to get Amendments handed in at the Table submitted to you? Do you rule my Amendment out of order? The CHAIRMAN I do not say the Amendment was out of order, but it is one which certainly should have been placed on the Paper. Mr. LEES-SMITH This Clause deals with the rate of the Income Tax and its reduction by 6d. in the £. This and the following Clause, which deals with Super-tax, we, on these benches, regard as the most important and the most objectionable in the whole of the Budget. We attach great importance to the Debate to-day, because here are two Clauses which, more than any other, indicate the wide difference in the essential principles of finance between ourselves and the Government. The Chancellor of the Exchequer may remember that we brought up this question of the Income Tax upon the Report stage of the Budget Resolutions, but this took place at a late hour of the evening, and the Chancellor of the Exchequer on that night said that as time was so restricted he would not deal with the arguments we had put forward, and he stated that he intended to make a full declaration of his policy when the Committee stage on these Clauses was reached. I will attempt for that purpose to summarise what are our objections to the reduction in the Income Tax by 6d. in the pound. We believe that this reduction is particularly ill-conceived and ill-advised at this moment because of the peculiar conditions of British industry and British trade at the present time. As we have listened in this House to the Debate for months past on the position of unemployment and trade, a great many hon. Members have noticed a curious contradiction in the nature of the Debate. 4.0 P.M. We have had during these last few months members rising and pointing out how deplorable and depressed are the hansard.millbanksystems.com/commons/1925/jun/15/clause-12-income-tax-for-1925-26#S5CV0185P0_19250615_HOC_298 1/33 11/8/13 CLAUSE 12.—(Income Tax for 1925–26.) (Hansard, 15 June 1925) conditions in a great number of the staple trades of the country—iron, steel, coal-mining, cotton, and so on. On the other hand—and this is where the contradiction comes in—the Chancellor of the Exchequer, when he introduced his Budget, pointed with satisfaction and pride to the fact that a penny on the Income Tax gave us a greater yield to-day than at any period in our financial history. That is a fact which wants some explanation. I suppose the explanation is that, as a matter of fact, this industrial depression is not evenly spread over the whole range of industry. For example, I believe it is practically certain now that the retail trades had a better year last year than almost any year since the close of the War. The fact seems to be that our unemployment and our trade stagnation is more or less concentrated on a group of trades— as I say, iron, steel, engineering, cotton, coal and so on—particularly that group of trades which depend for their sales upon the markets of foreign countries. That is the position. The first point which we wish to make is this. This reduction in the Income Tax is going to be of no substantial benefit to those depressed industries, because, owing to the fact that they are not making much in the way of profit and dividends, Income Tax has ceased to be a serious problem to them for the time being. What it is going to do is to distribute millions of pounds among the interest receiving, bond-holding, and rentier class, who do not and, from the very nature of their industrial position, cannot contribute anything to the recovery of our industrial life. That is why we first of all say that this reduction of Income Tax is not only unfair as between rich and poor, but is blind and regardless of the existing needs of British industry and trade. May I come to the chief argument used by the Chancellor of the Exchequer in defending this part of his Budget? He said that the present high rate of taxation was one of the main causes of the chill and check upon industry, and that, therefore, to reduce the taxation would be the best method of stimulating industry to another revival. Taxation, however, appears to me to be really a very minor influence affecting trade and industry. If you ask what is the cause of unemployment at the present time, the first answer is that a large proportion of our unemployment is always there. It is inherent and inevitable in the capitalistic order of society. That is one answer. The second answer is that, if you take the abnormal unemployment at the present time, it is partly due to the impoverishment and loss of purchasing power in our export markets, and it is partly due to the abnormal expansion of certain trades necessary for war which have this enormous capacity for output when the war is over. But the rate of taxation is a cause which plays only a minor part. Look at the experience on this subject. After all, the Income Tax has been reduced. It was reduced by 1s. in 1922, and it was reduced by another 6d. in 1923, and, if we read the Budget speeches of those two years, we find the same arguments used by the Chancellor of the Exchequer as the right hon. Gentleman has used this year. What has been the result of the experience we have had? After all, by this time the effect of those reductions ought to be showing itself, and the right hon. Gentleman ought to be in the happy position of reaping the reward of them. But what is the position? The melancholy facts of the position are that every month, practically every week with one exception since the beginning of the year, the numbers of unemployed have been greater than in the corresponding week of last year, and at this moment they are not far from 200,000 more than they were last year when the Labour Government was in office. The right hon. Gentleman in one of his speeches said that when his Government had had authority and power for three or four years they would confront us with the proved results of their doctrines It is unfortunate that at the present moment the number of unemployed is 1,250,000, and that the only proved result of these doctrines is that a certain minority of rich men have obtained a larger share of the national income than at any other time since the close of the War. I think that this doctrine that the best way of relieving unemployment and trade depression is to reduce the taxation of the wealthy, through the Income Tax and Super-tax, is one of the most mischievous and fallacious of those doctrines which are instilled in the public mind by Chambers of Commerce, Associations of Employers, and the Federation of British Industries. The fact of the matter is that when you reduce the Income Tax the great bulk of your relief about five-sixths, according to Sir Josiah Stamp, goes in those directions where the reduction of taxation has practically no effect in stimulating trade and industry. It does not stimulate your trade or your industry to reduce the Income Tax on income from War Loans, or rents, or mortgages, or debentures, or preference shares. If you wish to relieve trade and industry, you should give your assistance to those workers and employers on whom trade and industry depend, and, in particular, hansard.millbanksystems.com/commons/1925/jun/15/clause-12-income-tax-for-1925-26#S5CV0185P0_19250615_HOC_298 2/33 11/8/13 CLAUSE 12.—(Income Tax for 1925–26.) (Hansard, 15 June 1925) we believe that at this moment you should give the greatest assistance to those trades which are struggling against the greatest difficulties. Instead of that, the Chancellor of the Exchequer is giving the greatest assistance to that small section of the community who already obtain the greatest share of the national wealth.
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