§ 41. Mr. Stokesasked the Chancellor of the Exchequer whether new money created in the form of credit by the banks is regarded as capital employed in the business, and whether the interest thereon is, therefore, for the purpose of calculating profits, allowable free of Excess Profits Tax.
§ Sir J. AndersonIn computing for Excess Profits Tax purposes the capital employed by a bank all assets and liabilities which are required under Excess Profits Tax law to be taken into account in computing capital are duly brought into the reckoning including the credits ma de by the bank; but the assets represented by these credits would be offset by corresponding liabilities. A growth in credits would not, therefore, result in any increase in the capital employed and the interest received by the bank would not be offset by an allowance for increased capital.
§ Mr. StokesIn view of the fact that the rate of interest allowable on increased capital employed in businesses is higher than the rate of interest received by the banks on their loans, does it not stand to reason that any increase of capital employed by banks is allowed free of E.P.T.?
§ Sir J. AndersonAny increase of capital is allowable but, as I have pointed out, no increase would be allowed in respect of the assets to which my hon. Friend refers in his Question.
§ Mr. StokesThen the more new money the banks create the more profit they can get free of E.P.T.?
§ Sir J. AndersonI would ask my hon. Friend to ponder over the carefully phrased reply I have given to his Question. If any further question arises in his mind perhaps he would transfer it to the Order Paper.
§ Mr. GallacherWill not the Chancellor seriously consider taking over the banks, nationalising them?