§ 53. Mr. CHARLES EDWARDSasked the Chancellor of the Exchequer whether he will consider placing local authorities on the same basis as private individuals when being assessed for Income Tax purposes, so that when such authorities have two or more trading concerns the profits and losses shall be set off against each other and be treated as one concern, and be liable to Income Tax on the net result?
Mr. CHAMBERLAINThe matter to which the hon. Member refers forms part of the general question of the liability to Income Tax of local authorities, which has been fully discussed before the Royal Commission on the Income Tax. That Commission is now considering its Report, and further consideration of the hon. Member's suggestion must await the issue of the Report.
§ 57. Mr. HOLMESasked the Chancellor of the Exchequer, whether he is aware that the British Empire Union, in appealing for £250,000 for its campaign against Bolshevism and industrial unrest, states that it has obtained a concession from the Income Tax authorities whereby no tax need be paid on any contribution to its funds; whether this statement is correct; if so, whether it is contrary to the usual practice of Inland Revenue authorities 224 with regard to subscriptions and donations to charitable objects; and whether, if the statement is correct, the Inland Revenue will allow traders to debit as a trading expense any contributions they may make to the British Red Cross Society and similar charities?
§ 58. Mr. SWANasked whether the British Empire Union have received the permission of the authorities to state that no Income Tax need be paid on contributions to its funds which come out of traders' profits; if so, on what authority such rebate is allowed; and, if not, what steps will be taken in the matter?
Mr. CHAMBERLAINThe suggestion that there has been any remission in connection with the British Empire Union is based upon a complete misapprehension, and I am glad to have this opportunity of making the position clear. The Union has elected to come within the scope of a general arrangement, already applied to over 1,800 associations, by which traders' contributions are admitted in the first instance as expenses in the calculation of the traders' profit for Income Tax purposes, any liability in respect of contributions in excess of expenditure incurred for business purposes being met by a direct assessment upon the Association itself. It will be seen that this arrangement, which applies only to the contributions of traders, involves no loss whatsoever to the Exchequer.
§ Colonel WEDGWOODIs not this the only political organisation that has the advantage of enabling its subscribers to escape Income Tax; Are all the other 1,800 associations trading associations, while this is a political organisation?
Mr. CHAMBERLAINNo, Sir. If the subscription is to a political organisation it does not escape Income Tax, but a trader is entitled to deduct a subscription—I must be careful about my language in a matter of this kind. In the calculation of the traders' profit for Income Tax purposes, a trader is by law allowed to deduct as expenses money expended wholly and exclusively for the purpose of his trade, though, of course, the allowance does not extend to expenditure on capital account, in so far as the individual's subscription to this Association comes within that category, it is exempt from tax In so far as 225 it falls outside that category, the tax is charged on the Association, and is duly payable.
§ Major MACKENZIE WOODDo subscriptions to party funds come under this category?
§ Mr. HOGGEIs it a fact that these other subscriptions which are allowed to be deducted are subscriptions for employes to receive benefit?
§ Colonel WEDGWOODBut here the Inland Revenue authorities come to some decision that this particular union is a trading organisation and not a political organisation—has there been any decision of the Inland Revenue Department to allow this particular union to have this advantage?
Mr. CHAMBERLAINThis union is allowed to become subject to the arrangement that already applies to over 1,800 other associations—[An HON. MEMBER: "Trading associations!"]—and the effect of that arrangement is that that part of the subscription paid by members of the association which is not made as strictly trading expenses is charged to tax, not in the hand of the member who pays the subscription, but the association who receives it.
§ Mr. SWANCan we have an assurance that this money will not be used to frustrate the reasonable and just claims of workpeople who seek to raise their standard of living?
Mr. CHAMBERLAINI have no control over the purposes to which the money is applied: the only control which we as Revenue authorities have is over the payment of taxation. Where the tax is due we will see it is paid.
Mr. CHAMBERLAINThere is no rebate. We are not talking of rebate. We are talking of the alternative method of collecting the tax.
§ Viscountess ASTORWhat about the co-operative societies?
§ Viscountess ASTORI know.
Mr. CHAMBERLAINI could not answer without notice about every particular association. This is done in the ordinary routine of administration. I do not know what is included in the 1,800 associations I mentioned.