§ MR. FIELD (Dublin, St. Patrick)To ask Mr. Chancellor of the Exchequer whether his attention has been directed to the complaint of traders respecting the exemption of the Army and Navy and Civil Service Stores and co-operative societies from the payment of income-tax on profits; whether he can state upon what grounds those trading associations are exempted; and whether he will consider the advisability of placing co-operative business societies upon the same basis as others in similar trades.
(Answered by Mr. Austen Chamberlain.) There is no exemption from income-tax granted, as is popularly supposed, to co-operative societies or their members. In only one respect does their position with regard to the tax differ from that of the ordinary society or company. The ordinary society or company deducts income-tax from the member's or shareholder's dividend before it is paid over to him, leaving it to him either to bear the tax or to reclaim the amount deducted from the Inland Revenue authorities, if his income falls within the limit of exemption. In the case of co-operative societies, most of the members are working men whose incomes fall within the limit. Accordingly, to deduct income-tax in their case from the dividend before paying it over would involve nearly all the members claiming repayment. Nothing would be gained to the Revenue, and infinite annoyance and trouble would be given both to those who had to make the claims and to the Revenue officials in dealing wit h the enormous number of claims so made. It is therefore provided that, if certain conditions are satisfied, income-tax need not be deducted from the profits of co-operative societies before their distribution as dividends to individual members. No exemption, however, is given, as every individual member, whose income is above the exemption line, is liable to the tax on his share of those profits when received by him. The Army and Navy Co-operative Society, Limited, and Civil Service Cooperative Society, Limited, to which the hon. Member refers, do not fulfil the necessary conditions, and are, therefore, directly assessed to the income-tax.