HC Deb 16 July 1925 vol 186 cc1537-8
35. Mr. MAXTON for

asked the Chancellor of the Exchequer whether he is aware of the practice adopted by some limited liability companies whereby their shareholders are given cards entitling them to purchase the company's goods in retail shops 20 per cent, cheaper than the general public may purchase; and what steps, if any, he proposes to take to recover Income Tax upon these dividends not disclosed in balance-sheets

Mr. GUINNESS

My attention had not previously been called to the practice to which the hon. Member refers, but I do not think that the transactions which he describes could be held to involve liability to Income Tax on the part of the shareholders. A saving effected by the purchase of goods on favourable terms does not create a taxable profit, and in this connection I would point out to the hon. Member that it is not sought to charge Income Tax on the so-called dividends (or "discounts") on purchases which a co-operative society distributes to its members.

Mr. A. V. ALEXANDER

Is the right hon. Gentleman not aware of the very great difference between the societies he mentions, and limited liability companies. The societies have not a limited share capital, but the companies have.

Mr. GUINNESS

It does not arise on that. It arises on the individual transactions.

Captain GARRO JONES

Has the right hon. Gentleman considered that in the case of a departmental store it would be possible for a, shareholder to spend up to nine-tenths of his income in that store? Does not that call for some special step?

Mr. GUINNESS

That would not prevent his paying Income Tax on ten-tenths of his income.

Captain GARRO-JONES

If he was allowed to buy at 20 per cent. less than outside people, that is fully equivalent to income.