HC Deb 24 October 1916 vol 86 cc954-5

asked the Chancellor of the Exchequer whether his attention has been called to the inconsistency arising in the administration of the Excess Profits Tax from the fact that the statutory percentage of 6 per cent. or other substituted statutory percentage is, under one portion of the Act, the rate for capital employed in the pre-war standard period, and under other portions of the Act it becomes the rate for capital put into an undertaking in the accounting or postwar period; whether he recognises that the rates for money in pre-war periods have been greatly increased in post-war periods; and what he is prepared to do to remedy this state of affairs?


I cannot agree that the use for all the purposes of the Excess Profits Duty of a uniform statutory percentage fixed by reference to pre-war conditions involves an inconsistency. It is no doubt true that capital now invested in business earns a higher reward than in pre-war times, but where this increased reward is retained by the proprietor as part of his profit, it is in my judgment no less than any other element of profit which arises out of war conditions and contributes to the excess of profits over the pre-war standard, rightly included in the scope of the charge.


Is the right hon. Gentleman aware that only a fortnight ago, before the Board of Referees, it was made clear that the statutory percentage applicable to the pre-war period is one thing and that the percentage applicable to the post-war period is another—in fact, almost double—and that very serious difficulty has been caused to the taxpayer by such an anomaly in the Act?


That is the very point which I have endeavoured to answer.