HC Deb 04 June 1940 vol 361 cc772-3
55. Mr. Hely-Hutchinson

asked the Chancellor of the Exchequer whether, in view of the decision to raise the Excess Profits Tax to 100 per cent., he intends to proceed with the Limitation of Dividends Bill?

Sir K. Wood

The decision to raise Excess Profits Tax to 100 per cent. all round has materially affected the limitation of dividend proposals. The main object of the Bill was by limiting dividends to prevent an increase in the purchasing power in the hands of shareholders and this will now be substantially attained. Moreover, companies which would now be mainly affected if the Bill is passed are those which have shown themselves prudent in the distribution of their dividends. In these circumstances, I have decided not to proceed with the Bill. The prohibition imposed on bonus issues for the period of the war will, however, remain. I should like to emphasise that the objective of the original proposals remains as important as ever, and to the limited extent that it is not attained by the imposition of 100 per cent Excess Profits Tax, I am sure that all public companies concerned will act in accord with the general principles underlying the Bill. The national interest requires reduced consumption by individuals and the greatest measure of support for new Government loans from all.

Mr. Mander

Will the right hon. Gentleman bear in mind that as a result of the decision he has just announced it will be possible for certain companies, in spite of the 100 per cent. Excess Profits Tax, to pay increased dividends if they so desire? Will he give the matter further consideration before abandoning what was really an excellent Bill and is still desirable?

Sir K. Wood

I think my hon. Friend will see that I have anticipated a question of that kind, because the companies he refers to are those which have been prudent in regard to the distribution of their dividends.

Mr. Stokes

Will the Chancellor of the Exchequer state exactly what will prevent a company from distributing its reserves in additional dividends?

Sir K. Wood

I think I have already referred to that.

Mr. Benjamin Smith

Is the right hon. Gentleman not aware that by dispensing with the 100 per cent. Profits Tax he will create a very sad feeling among workmen who have thrown in their whole lot on the assumption that this tax was to be included?

Sir K. Wood

I do not think my hon. Friend could have heard my answer.