§ 38. Lord CLAUD HAMILTONasked the Chancellor of the Exchequer on what principle the large profits made by co-operative societies have not hitherto been assessed for Income Tax; and whether he will take the opportunity of the present Budget to put an end to this exemption?
§ 40. Mr. MACMASTERalso inquired whether, under the new Budget, it is proposed to assess for Income Tax co-operative trading societies which compete against ordinary traders?
§ Mr. McKENNAWith the permission of the House, I will answer together this question and Question No. 40. In so far as co-operative societies make a profit through their trading operations with non-members, such profit is already assessable to Income Tax in the hands of the recipient. The ordinary transactions of these societies resulting in a return to members of any excess purchase price that may have proved to have been paid by the members is, in fact, a mere discount on purchases and not a profit.
§ Mr. MACMASTERIs there any sound ground why the profits should not be taxed at the source in the case of these co-operative societies?
§ Mr. McKENNAI think my hon. Friend and I are rather at difference as to what is profit. I am not sure I can answer his question precisely in the form he puts it.
§ Mr. MACMASTERAssuming that a co-operative society, or a corporate body, has a certain amount of money to carry to the credit of the profit and loss account, as any other limited corporation may do, is there any ground why the tax should not be assessed with reference to that particular profit, as it is in the case of other incorporated societies?
§ Mr. McKENNAIt is a question mainly of facilitating the work of the Inland Revenue authorities. If the result of distributing these profits only means that the same profit will be recovered by repayment, on the ground that the persons to whom the profit belongs are under the limit of assessment, the only result would be to greatly increase the work of the Inland Revenue authorities.
§ Mr. DENMANMay I ask whether co-operative societies will be subject to the Excess Profits Tax?
§ Mr. McKENNAYes, Sir, the same as anybody else.
§ 42. Sir C. KINLOCH-COOKEasked the Chancellor of the Exchequer whether he can see his way to extend the same relief to limited liability companies in respect to Income Tax as it is proposed to extend to individuals in the event of their proving that their actual income from all sources for the year is less by one-fifth than the income on which the tax has been paid?
§ Mr. McKENNAI am unable to adopt the hon. Member's suggestion. The relief referred to is intended to benefit individuals whose total actual income is less than the total income on which they have borne tax. The same considerations do not apply to the case of a company's profits.
§ Sir C. KINLOCH-COOKEIf the right hon. Gentleman finds that they do apply, will he be ready to reconsider his decision?
§ Mr. McKENNAIf the hon. Member will tell me that they do apply, I will certainly reconsider the matter.
§ 51. Mr. BUTCHERasked the Chancellor of the Exchequer whether the number of persons of small means deriving the whole or the greater part of their income from the rent of houses or land is considerable, and that it would be a hardship on such 995 persons to pay the whole of the increased Income Tax for the year assessed in respect of such rent in one instalment; whether the effect of the Budget proposals is to allow such persons to pay the Income Tax so assessed by instalments on 1st January and 1st July; and, if not, whether he will consider the propriety of allowing them to pay by such instalments?
§ Mr. McKENNAI would refer the hon. and learned Member to the reply which I gave on the 28th instant to my hon. Friend the Member for the Bridgeton Division of Glasgow.
§ 57. Sir JOHN SPEARasked the Chancellor of the Exchequer if he is aware that, in order for farmers to elect to be assessed for Income Tax on Schedule D rather than on Schedule B, they must give notice to the Surveyor of Taxes of their intention before 1st October; and whether he will therefore, for this year, extend the time for giving such notice to 1st December so as to give time for farmers to consider the matter?
§ Mr. McKENNAFarmers who elect to be assessed under Schedule D in lieu of Schedule B are required to give notice to the Surveyor of Taxes on or before the 5th June in each year. The question of an extended time limit for the current year is under consideration.