§ 38. Mr. A. Edwards
asked the Chancellor of the Exchequer whether, in any new proposals regarding Excess Profits Tax, he will remove the anomaly which requires businesses working under almost identical conditions as to turnover, capital employed, and profits, to pay disproportionate amounts, which anomaly has the effect of guaranteeing standard profits to some companies and no profits to others and discouraging manufacturers whom he is urging to greater production?
§ Sir K. Wood
I cannot agree with my hon. Friend that the position to which he refers is anomalous or that the effect of the Excess Profits Tax is such as he suggests. The Excess Profits Tax is essentially a tax, not on a trader's profits as such, but on the excess of his profits over his standard profits, which are normally determined by reference to his profits of a pre-war standard period. Two concerns making similar profits under similar conditions now may well have very different standard profits and very different excess profits, but in any case the trader is left with his standard profits to which the tax does not apply.
§ Mr. Edwards
Is the Minister aware that he has not answered the Question, which is causing a considerable amount of trouble in the country, and is he not aware that an exact case has been submitted to him of two people with the same amount of capital earning almost identical profits—each making £12,000—of whom one paid £10,000 in Excess Profits Tax and the other only £2,000, and that as the years go on this is bound to cause considerable friction in the country?
§ Sir K. Wood
My hon. Friend has been to me several times about the Excess Profits Tax at 100 per cent., but the position remains as I have stated it.