§ 48. SirLESLIE SCOTTasked the Chancellor of the Exchequer how much sacrifice of revenue in the current year would be involved by an abatement of Income Tax to the extent of one-half the standard rate upon such part of the profits of companies registered under the 746 Companies Acts as is put to reserve and not distributed in dividend, firstly, if the relief were extended to all such companies or, secondly, if the relief were limited to companies engaged in manufacture, construction, mining, and shipping, with a proviso in each case that if such moneys were not used for the renewal of plant or otherwise for the development of the business, but taken from reserve and distributed amongst shareholders either in cash or bonus shares, tax should forthwith become payable at the same rate as if the profits had been distributed in the first instance and not put to reserve?
§ Mr. CHURCHILLOn the limited information available I estimate that the cost of reducing the Income Tax to half the proposed standard rate of 4s. on the profits of all companies (including statutory and chartered companies) put to reserve for the renewal and the development of the business, would be, roughly,£23,000,000. If the concession were restricted to companies engaged in manufacture, construction, mining or shipping, the estimated cost would be about £14,000,000.
§ Sir L. SCOTTCan the Chancellor of the Exchequer distinguish between limited liability companies registered under the Companies Acts and chartered companies, so that the House may know the expense that would be involved in regard to the limited liability companies only, engaged in the four subjects of production mentioned in the question?
§ Mr. CHURCHILLI think it highly probable that I could distinguish between them, but I could not do so in answer to a supplementary question.
§ SirL. SCOTTI understand that. Will the Chancellor of the Exchequer be in a position to let the House have information in approximate time on that head, before the Committee stage of the Finance Bill?
§ Mr. CHURCHILLIf my hon. and learned Friend will put a question on the Paper, I will see what information can be obtained.
§ 50. Sir L. SCOTTasked the Chancellor of the Exchequer whether the incomes of companies are subject to Income Tax in France, Holland, and the United States; and whether tax is levied upon such portion of the companies' income as is distributed amongst shareholders?
§ Mr. CHURCHILLMy information is to the following effect. In France, companies are subject to the schedular Income Tax on business profits on the whole of their profits. Dividends distributed are also subject, in the hands of the individual (a) to a schedular tax on income from securities, etc., and (b) as part of the individual's total income, to the general Income Tax. In Holland, dividends from companies are subject, in the hands of individuals, to the general Income Tax levied on the total income. In addition, companies are liable to a dividend tax, which is based upon the amount of dividends distributed. In the United States, individuals are liable to a normal tax at the rate of 6 per cent., subject to certain reliefs, and, in addition, when the total income exceeds $10,000, to graduated surtaxes. Companies are subject to a normal tax, at the rate of 12½ per cent., or 6½per cent. in excess of that levied upon individuals. In addition, companies are subject to a Capital Stock Tax, at the rate of one-tenth of one per cent. on the capital value of their stocks it excess of $5,000.
§ 53. Mr. COMPTONasked the Chancellor of the Exchequer whether his attention has been drawn to the action of the officials of the Board of Inland Revenue in levying Income Tax on thrift funds and holiday savings clubs; whether such action has his consent or authority and, if not, will he take steps to see that a stop is put to this practice?
§ Mr. CHURCHILLThere is no exemption from Income Tax in favour of thrift funds and holiday clubs; but where these funds or clubs are organised for the benefit of persons of small income, the Inland Revenue authorities allow a special arrangement under which the liability of the fund to tax in respect of interest and other income is restricted to that part of the income that is paid to members sufficiently wealthy to be liable to tax. Inquiries by the authorities in regard to such funds are mainly directed to secure that the relief from tax under this arrangement should he duly given.