HC Deb 13 February 1934 vol 285 cc1757-8

asked the Chancellor of the Exchequer whether, in view of the loss caused to the distributive trades through the encroachment of co-operative societies into the sphere of private trading; and, in order to prevent the adverse effect which they are calculated to have upon the revenue, if he will, in his forthcoming Budget, include provisions for taxing the whole gross profits of co-operative societies?


I am afraid that I must decline my hon. Friend's invitation to anticipate the Budget statement.


asked the Chancellor of the Exchequer if he is aware that an ordinary trading concern may not charge its gifts to hospitals and charities against profits but is taxed on such gifts; and can he state what steps have been taken to ensure that, since the Finance Act, 1933, none of the sums of money spent by the co-operative societies on political propaganda are charged as a business expense but are taxed as part of the profit?


My hon. Friend appears to be under a misapprehension. The question whether any particular sum expended by a trader is deductible in computing his profits for income tax purposes is governed by the general provisions of the Income Tax Acts, which apply to the assessment of co-operative societies under the Finance Act, 1933, in precisely the same way as to other traders. Rule 3 (a) of the Rules applicable to Cases I and II of Schedule D provides that no sum shall be deducted in respect of any disbursements or expenses not being money wholly and exclusively laid out or expended for the purposes of the trade, …. Under this Rule such of the gifts mentioned by my hon. Friend as represent ordinary subscriptions to local hospitals and charities from which the traders' employés may derive benefit would be regarded as allowable. On the other hand, money spent on political propaganda is not deductible. I have no reason to suppose that co-operative societies are claiming the allowance of such expenditure in the computation of their income tax liabilities. If such a claim were made it would be opposed on behalf of the Revenue by the inspector of taxes in the ordinary exercise of his duty.


asked the Financial Secretary to the Treasury what would be the loss to the revenue if the entire distributive trade of this country were to be based on co-operative principles?


The revenue statistics do not show the amount of tax derived from the distributive trade. I regret, therefore, that I am not in a position to furnish any estimate of the effects on revenue that might result from such a change.


But does not the hon. Gentleman agree that there would be a loss of revenue?