NEW CLAUSE.—(Relief and Composition for Co-operative Societies.) (Hansard, 5 July 1917)

§ Mr. CURRIE

I beg to move, "That the Clause be read a second time."

The discussion we had last year on this matter affected ordinary Income Tax only. This year, of course, we are talking of excess duty. I confess I listened with some disappointment to the statement made by the Chancellor of the Exchequer, because I had myself arrived at the conclusion that co-operative societies were being hardly used. I have never concealed my view that so far as ordinary Income Tax is concerned there is a fault in the present position. The fault does not lie entirely with the societies. Circumstances have changed so much that the present position is not satisfactory. However, let that be; I want to talk about Excess Profits Duty. Just now we do not know the facts, and that is another reason why I feel rather a grievance against the Treasury. It seems rather unfair to the House of Commons and the people paying the taxes that you do not have definite information as to how much Excess Profit Duty is being paid by these societies. I am told by the societies that it amounts to between £4,000,000 and £5,000,000 If that statement is true I think that that is a great deal more than they should pay.

I was rather surprised that the hon. Member who argued as to the nature of the surplus earned by these societies spent so much time on the point because 1468 I think that we have passed that point. It is admitted that the surplus earned by these societies is not in the nature of trade profit. I admit all that he said, but I think that the compromise arranged last year when the tax was put on was a compromise which, from our experience, is shown not to have been reasonable and fair. I think that the Chancellor of the day treated the co-operative societies with what he had good reason to believe was, and what they accepted as, fairness, and I confess that some of the language which has been used regarding my right hon. Friend the late Chancellor is very unworthy and quite unjustified. For instance, take the language used by one of the directors of the Scottish Wholesale Co-operative Society, Mr. Gallagher: That method of assessment was arranged by which the co-operative movement was completely had. We were subjected to nothing more or less than legalised blackmail. That shows how strongly the co-operative societies feel that the compromise is working unfairly. But I do not think that the language is in the least justified. I think that the co-operative societies in this matter have a case that does not require to be enforced by language of that kind. Of course if these profits are not really commercial profits—and that is the point of view which I take—in logic they should not be liable to Income Tax at all and they should not be liable to Excess Profit Duty. But where I differ from some of my Friends is here. They think that when they have established that quite clearly —and it is established quite clearly to my mind—that ends the matter. I do not think that it does.

My contention is that it merely takes the matter down to this point, that the fair way to treat a trader or a worker is to satisfy yourself that he pays a Fair and reasonable share of the charges of keeping up the Army and Navy and the Civil Service, without which no trade can exist, and if you cannot find that out by some method placed at your disposal by the Income Tax law, then you have got to find some other way. My suggestion is that another compromise could be arranged between the Treasury and the societies whereby the societies would pay a levy on a turnover which would be a great deal less than £4,000.000 or £5,000,000 a year. It might be £2,000,000 1469 a year. That would not be Income Tax precisely, but it would be a substitute for it which would suit them a great deal better than paying the same amount twice over. I admit that there are complications in the way, and perhaps there is no time to arrange a concession of this kind just now. If that is so, then I make a further appeal to the Chancellor that the simplest way of dealing with the matter is to continue the compromise which he inherited from his predecessor, but not to raise the 60 per cent, to 80 per cent, in the case of those societies. The Chancellor has admitted that there is a case for inquiry. He has not committed himself, but so far as the societies are concerned there is a very strong feeling which is not without foundation, and the simplest way of dealing with the matter would be to let the duty stand at the figure of 60 per cent. I would put it to the Chancellor— why should ho not accept this suggestion if there is any case for consideration at all? I do not suppose that at this stage he will have time at his disposal to arrange any new compromise. It is necessary to have the Budget finished very soon, but if there is a case of hardship-though the whole question as far as possible should be left alone, and further discussion should be postponed, yet the rate should be left at 60 per cent, instead of being raised to 80 per cent.

I do not say that that is a logical compromise. It is simply substituting one compromise for another, and reserving the discussion which must take place until after the War. But certainly I protest against language such as has been used being used towards the Chancellor of the Exchequer of two years ago, who acted perfectly fairly au the time, as the co-operators themselves said. The Parliamentary Committee of the co-operative societies is in a difficulty. It sees the unreasonableness of its own position, and yet it is unable to prove many of the things for which it contends. I know that many of the resolutions passed by the retail traders' societies justify the co-operative societies having a feeling of resentment and apprehension as to what is really their own domestic business being interfered with. I do not believe that the co-operative societies are opposed to paying fair taxes, and I will tell the Committee why. If the non-payment of tax 1470 were their sole object they could reduce their prices to the point of paying no taxes at all. Of course they would do it at some inconvenience, because it would interfere with the use of their own movement as a thrift agency which I would very much regret. I think that that is at the bottom of the feeling which the co-operators very often express at the charges of the retail traders. So far as the latter are concerned, I think that they have themselves very Largely to blame for the view which co-operators take of them. Many of their resolutions do express a determination to interfere unduly with the co-operative societies, and I think that they are very unwise. However, I think that the Chancellor has at his disposal means of burying this dispute, and meantime I appeal to him to leave the tax in the case of these societies at 60 per cent.

FIRST SCHEDULE.
RATES OF DRAWBACK ON TOBACCO.
		s.	d.
Cigars	the lb.	8	4
Cigarettes	the lb.	8	2
Cut, roll, cake, or other manufactured 'tobacco	the lb.	8	0
Snuff (not being offal snuff)	the lb.	7	8
Stalks, shorts, or other refuse of tobacco (including offal snuff)	the lb.	7	6

Part II.
		s.	d.
Cigars	the lb.	7	3½
Cigarettes	the lb.	7	1¾
Cut, roll, cake, or other manufactured tobacco	the lb.	7	0
Snuff (not being offal snuff)	the lb.	6	8½
Stalks, shorts, or other refuse of tobacco (including offal snuff)	the lb.	6	6¾