§ 59. Mr. CONNOLLY
asked the Chancellor of the Exchequer if he is aware that considerable sums are being allotted year by year to shareholders in industrial concerns in the shape of bonus shares; that, according to a recent decision in the House of Lords, these bonus shares are not assessable for Income Tax or Super-tax; and does he propose to introduce legislation to strengthen the existing Income Tax and Super-tax Acts to cover this form of income?
§ Mr. CHURCHILL
The hon. Member appears to be under a certain misapprehension. So far as Income Tax is con- 2106 cerned, the profits of an industrial company are assessed irrespective of the manner in which they are disposed of, and the conversion of accumulated profits into bonus shares therefore does not involve any loss of duty. As regards Super-tax, I am aware of the legal limitations, as indicated by recent judicial decisions, of the power to charge this tax, where accumulated profits are distributed in the form of shares or debenture stock. The hon. Member will not expect me to express an opinion at present as to whether further legislation is called for.
Is the right hon. Gentleman aware that this custom of giving bonus shares is casting one of the greatest of burdens on our industry, and can he see his way to meet it with a special form of taxation?
§ Mr. MACQUISTEN
Is the right hon. Gentleman not aware that, when a company accumulates reserves, it is for the purpose of developing business, and that that is good for the country and for the industry, and does them both great financial good