§ 23. Commander BELLAIRS
asked the Chancellor of the Exchequer whether 1509 there are any restrictions imposed on the use of the funds of co-operative societies for political party purposes in connection with the immunity they enjoy from Income Tax?
§ Mr. BALDWIN
I would invite the attention of my hon. and gallant Friend to the provisions of Section 39 (4) of the Income Tax Act, 1918, under which a society registered under the Industrial and Provident Societies Act, 1893, is entitled to exemption from Income Tax under Schedules C and D, unless it sells to non-members and the number of its shares is limited. The question of the Income Tax liability of co-operative societies is dealt with in Section XII. of Part V of the Report of the Royal Commission on the Income Tax, and if my hon. and gallant Friend will refer to that Section of the Report he will appreciate that the relief from tax is grounded on the nature of the surpluses which arise from the transactions of the societies, and is not connected with the manner of the distribution of those surpluses.
§ Major PRESCOTT
Is the hon. Gentleman aware that a large number of members of co-operative societies object to their profits being used in this way, and can he say whether the Law Officers of the Crown have been consulted as to the legality of the dividends being so dissipated?
§ Mr. BALDWIN
I have no doubt that something in connection with this matter will come up for discussion in the course of the Financial Debate.