§ 4.43 p.m.
§ Sir Reginald Clarry
I beg to move, in page 16, line 19, at the end, to insert:(6) This Section shall not apply to any trade or business carried on by statutory undertakers and consisting wholly or mainly in the rendering in the United Kingdom of any of the following services, namely, the supply of water, gas, electricity or hydraulic power.For the purposes of this Sub-section the expression 'statutory undertakers' means any local or public authority authorised by, or by virtue of, any enactment to render any of the services aforesaid in the United Kingdom, and any other person so authorised who is precluded by, or by virtue of, any enactment from charging any higher price for those services than that authorised by, or by virtue of, the enactment or, in the case of a body corporate is either so precluded or precluded by, or by virtue of, any enactment from paying a dividend at any higher rate, or distributing by way of dividend any greater amount than that authorised by, or by virtue of, the enactment."
I move this Amendment on behalf of the Joint Conference of Public Utility Undertakings. The anomaly which it is designed to rectify was not appreciated until after the passage of the Bill through Committee last week. Public utility undertakings operate under Acts of Parliament which entail statutory obligations and restrictions as to prices and distribution of profits. It was for this reason that those undertakings were exempted from the National Defence Contribution in the 1937 Finance Act. The present Excess Profits Tax is an alternative to the National Defence Contribution. In the 1939 Finance Act, Section 28, Armaments Profits Duty is applicable to articles and materials, and although an Amendment was put down in similar terms to the provision in the 1937 Act the Government did not accept it, but put in something else which had the same effect, namely, that the articles sold by public utility undertakings were to be exempted. It seems to us that as the Excess Profits Tax supersedes the Armaments Profits Duty and the National Defence Contribution, it is only a logical consequence that a provision should be inserted in the present Bill 208 to make the position of public utility undertakings quite clear.
§ 445 P.m.
§ The Chancellor of the Exchequer (Sir John Simon)
My hon. Friends have called attention to the fact that the proposed Excess Profits Tax would apply to statutory undertakings. As I said when I opened the Emergency Budget, it was intended to apply this tax to statutory undertakings, and I do not see any reason why it should not be so applied. The National Defence Contribution was a tax on profits. The Excess Profits Tax is not a tax on profits, but a tax on the increase of profits. There may have been something to be said for excluding statutory undertakings from the National Defence Contribution, although that matter, I recollect, was challenged. I am bound to say that in the case of certain examples which could be quoted, I can see a considerable argument, for including some such undertakings. When we come to the Excess Profits Tax, which is a tax upon an increase in profits above a previous datum line, if a case of increased profits occurred in relation to statutory undertakings, I think they ought to join in the general contribution. They were not excepted from the Excess Profits Duty for the reason, no doubt, which I have now stated. While, therefore, I appreciate the importance of the point raised by the Amendment, which I have considered carefully, I regret I cannot agree to this change being made in the Bill.
§ 4.47 p.m.
§ Mr. Pethick-Lawrence
I cannot help thinking that the right hon. Gentleman is justified in the attitude he has taken up. The effect of the Amendment would be that statutory undertakings would be entitled to make profits above the profits they made before the war without having to pay a contribution towards this tax. My hon. Friends and I certainly support the position taken by the Chancellor of the Exchequer.
§ Amendment, by leave, withdrawn.