§ 19 and 20. Mr. LOUGHasked (1) whether all the following businesses and professions will be included under the proposed taxes on excess profits: bankers, bill discounters, insurance companies, accountants, trades unions, friendly and co-operative societies, and all branches of the medical and legal professions; and (2) whether the proposed exemption of agriculture from the tax on excess profits will extend to estates and enterprises in the Colonies as well as in the United Kingdom; and whether this exemption will be confined to agricultural productions, or if it is to be extended so as to cover the sale and distribution of agricultural products such as cattle, grain, wool, cotton, bacon, butter, tea, sugar, and rubber?
§ Mr. McKENNATrades, manufactures, and business concerns (including agencies) assessable to Income Tax Schedule D are within the scope of the tax. For more detailed information my right hon. Friend will perhaps be willing to await the circulation of the Bill.
§ Mr. LOUGHI desire to have this information in order that the matter may be considered. Could the right hon. Gentleman give me the particulars asked for in the first question, as to whether these businesses will be included? No one at present understands.
§ Mr. McKENNAI think any banker will know whether he is included under Schedule D or not. I do not think any banker or bill discounter will have the slightest doubt about it.
§ Sir G. YOUNGERWhat will be the position of fire insurance companies? They are in a wholly different position to some of these others.
§ Mr. McKENNAThat is the objection to raising this question in the form of a 827 question and answer. Obviously it is a matter that must be dealt with when the Bill is circulated to the House.
§ 21. Mr. HAROLD SMITHasked the Chancellor of the Exchequer whether, in ascertaining the liability to tax on excess profits, taxpayers may elect to take the year immediately preceding as the datum line instead of the average for the three years?
§ Mr. McKENNAThe answer is in the negative.
§ Mr. HORNERCan the right hon. Gentleman arrange that where, on account of strikes or any other exceptional reasons, the profits of the one year prior to 1914 were unusually low, the tax-payer can substitute any other year for the bad year?
§ Mr. McKENNAI think that is a question which would be better discussed when the Bill is before the House.
§ Mr. CLANCYHas the attention of the right hon. Gentleman been directed to the special case in Dublin, where a railway strike disastrous to trade took place in the year 1913–14, with the consequence that almost every trade and business in the city and adjoining parts of the county were dislocated, and in some cases ruined for the time being? Will he consider the injustice that would be done, if that year were taken as one of the average years for normal profits?
§ Mr. McKENNAThe date of which my hon. Friend speaks is inaccurate, because I believe the strike he refers to was in 1914, and I am not sure that it would come under the years of assessment included for the datum line.
§ Mr. CLANCYI thought this might affect his consideration as to the form in which the Bill should be introduced.
§ 22. Mr. HAROLD SMITHasked whether exemption from liability to pay tax on excess profits will be granted to companies incorporated in the United Kingdom whose operations are wholly carried on and directed abroad, in the Dominions, or in Dominions which have imposed or may impose a similar tax, respectively?
§ Mr. McKENNAThe answer is in the negative.
§ 23. Mr. HAROLD SMITHasked whether a company which holds shares 828 in another company which has paid tax on excess profits will be relieved pro tanto (so far as the dividends received are concerned) from liability to pay the tax on excess profits?
§ 26. Mr. INGLEBYasked whether, in the case of a young company which has only been in existence two or three years, and cannot therefore have acquired a prewar standard, it is his intention to tax as excess profits the increased profits that have naturally accrued from the development of the company's business?
§ 27. Sir J. D. REESasked how it is proposed to assess war profits in the case of foreign firms represented in the United Kingdom by agencies or branches, the head offices being situated in neutral countries?
§ Mr. McKENNAAs regards these questions, I would ask the hon. Members to await the circulation of the Bill in connection with the more detailed provisions of the tax.
§ 24. Mr. HAROLD SMITHasked whether under any circumstances pre-war profits are liable to taxation as excess profits; and whether trading companies, the books and accounts of which are closed each year subsequent to the 1st of September, will be exempt from taxation of excess profits in respect of profits made before the outbreak of war, although such profits appear in balance-sheets drawn up subsequent to the 1st of September, 1914?
§ Mr. McKENNAIt is not proposed to apportion in the manner suggested the profits shown in an ordinary business year of account.