Clause 27.—(SURTAX ASSESSMENTS.) (Hansard, 19 May 1952)

§ Mr. E. Fletcher
Would the Financial Secretary or the Solicitor-General confirm that this Clause operates retrospectively, and that the well-known objections to all retrospective legislation that hon. Gentlemen opposite have so frequently enunciated have no operation in this respect?

§ The Solicitor-General
This Clause is rendered necessary because one taxpayer has objected to paying on his Surtax assessment on the ground that Surtax assessments are now made at Thames Ditton, whereas the Regulations provide that they be made at London. It would be possible to alter the Regulations, but that would apply only to the future. To collect money due under an assessment made at Thames Ditton it is necessary that this Clause should have retrospective effect.

§ Mr. Houghton
Is it a fact that certain Surtax payers have been unscrupulous and unpatriotic enough to plead exemption from their Surtax assessments on the ground that they are bad because they have been made at Thames Ditton instead of London?

§ The Solicitor-General
The hon. Gentleman would be the first person to draw attention to the fact that someone was called on to pay tax on an assessment that was not legal.

§ Mr. R. A. Butler
I beg to move: "That the consideration of Part IV be postponed until after the consideration of Part V."
This has been done really for the convenience of hon. Members, and I give what I think is a very good reason. I am putting down tonight—and they will appear on the Order Paper tomorrow morning—certain further Amendments dealing with the Excess Profits Levy. These will deal with the standard years, from which it is now proposed to make a choice.
194 Quite a number of other Amendments will appear on the Order Paper in the morning. It will be clear when hon. Members read them, that these will lighten the burden of the Levy in hard cases, and it will at the same time—I am now coming to the reason for postponing Part IV, which deals with Profits Tax—be necessary to protect next year's Revenue. One of the Amendments I propose to put on the Order Paper will embody the idea of recouping a substantial part of the reductions made in the Excess Profits Levy by putting up the distributed rate of Profits Tax to 22½ per cent. This will reduce the tax below what it was previously under the late Government, but it will mean that the tax will continue to fall on the proportion of profits distributed in dividends.
I will say only briefly that in my opinion this should be noted by both sides of industry in responding to the appeal I have made, and I speak to the trade unions in particular for restraint in wage demands. I am keeping the non-distributed Profits Tax at the low figure of 2½ per cent. I think it right to mention this, as the Amendments will be on the Order Paper tomorrow so that they can be discussed in due course during this week. It would be unfair to ask the Committee to take the Profits Tax part of the Bill immediately in view of that statement. Therefore, when Members have read these Amendments it will be much better to deal with the Excess Profits Levy and take the Profits Tax afterwards.

§ Mr. Roy Jenkins
The only difficulty we are in here is that it is not quite clear to me from the Chancellor's statement to what extent these proposed changes in the Profits Tax will recoup the loss that will follow in the yield of the Excess Profits Levy as a result of the Amendments he already has put down and those which he proposes to put down tomorrow. As I understand it, the position under the Budget was that we were to lose £100 million of revenue from the Profits Tax and gain £200 million from the Excess Profits Levy. I imagine, so far as we can follow at this stage the changes which have been announced by the Chancellor, that to take 1950 as one of the standard years will drive a very big hole into the yield of the Excess Profits Levy.
195 11.30 p.m.
For my own part I would not object, provided the money comes back on the Profits Tax, because most of my hon. Friends take the view that the Profits Tax is in itself a far more desirable form of taxation than the Excess Profits Levy. But before being asked to consider in detail tomorrow exactly how big a hole we are willing to drive into E.P.L. we ought to know exactly the position so far as recouping this revenue on the Profits Tax is concerned.
Is it possible for the Chancellor to tell us, before we accept this Motion, whether his proposal for changing the Profits Tax does amount to getting back from the Profits Tax just as much revenue as he will lose from the Excess Profits Levy both by virtue of the Amendments he tabled, I think, last Friday and the Amendments he is to put down tomorrow?

§ Mr. Butler
The answer to the hon. Member is that I shall have to explain in a speech of some length on Clause 31 the total effect of the proposal in regard to the Excess Profits Levy and the Profits Tax. The hon. Member would not be right in supposing that the sums exactly balance. But he will have to take into account from the point of view of the Revenue the greater certainty of distributed profits returned to the Revenue as against the lesser certainty of what would be the yield of the Excess Profits Levy. There will be a balance against the Revenue, but not a very large sum, and the general effect will be that the distributed Profits Tax will be less-that is to say 22½ per cent.—than it was before. But it will result in a considerable recoupment of a large part of the concessions made.
There will be no departure from the standard years, but now a choice of two out of those three will be given, except in exceptional cases dealing with the Far East and other considerations. Actually all the detailed Amendments have been put on the Order Paper. These later Amendments are matters of principle which are easy to understand, whether hon. Members agree with them or not. On the merits it would be much fairer if I made a statement tomorrow.

§ Mr. Jenkins
The only thing hon. Members might like to have from the Chancellor tonight is an assurance that before we come to deal finally with these Amendments to the Excess Profits Levy we will know precisely where we stand—

§ The Chairman
We cannot be precise tonight. I do not think we can discuss the matter further tonight if we are to discuss it tomorrow. The only thing we can discuss at the moment is the reason why Part IV should be postponed.

§ Mr. Jenkins
With respect, I think that in considering whether it is proper and wise to postpone Part IV and take Part V first it is extremely important that we should know—when we consider Part V tomorrow, which involves the giving of concessions which will reduce the Revenue—exactly what are the proposals of the Chancellor for providing compensation for that under Part IV. I was asking that the Chancellor should give us, not in great detail, but an assurance that before we deal with the Amendments to Part V tomorrow he will be in a position at some stage to tell us exactly how much revenue he is getting back from the Profits Tax, so that we should know when we continue our consideration of the Bill tomorrow.

§ Mr. Albu
It seems to be a most extraordinary situation. We have, after all, had the whole of the Budget debate and passed the Ways and Means Resolution. Yet before we can proceed to the raising of this Excess Profits Levy there is a reversal of the whole of the Chancellor's Profits Tax policy in accordance with criticisms made very largely by hon. Members on the other side of the Committee. We have criticised not only the imposition of the Excess Profits Levy, but also the reduction of the Profits Tax. We also criticise the reduction of the Profits Tax before we have this increase, which we are told will be introduced. Surely there will have to be a Ways and Means resolution? Can the tax be raised without that change, for if there is no Ways and Means resolution, it would appear that the point which has been raised by my hon. Friend is a very valid one. It does appear to me that we are going to make important changes in taxation in the middle of a Finance Bill.

§ Mr. Butler
What I am proposing is to go out of my way to help the Committee. I am told that I could announce these items in the course of the Committee stage in answer to speeches, but I am putting them on the Order Paper ahead of any debate so that right hon. and hon. Members will have the opportunity of considering my proposals for two or three days. The Profits Tax cannot come up until Thursday, and I am giving the opportunity I have just mentioned instead of jumping in during the discussion.
As regards the point made about Ways and Means, I am informed that I could make this Amendment as late as Report stage; but, curiously enough, we do not need the Ways and Means Resolution for this. I could have left this until much later, but I thought it to be in the interests of hon. Members that there should be a "clean" Bill ready to be printed for Report stage so that the House could see the whole picture. I am putting myself out in order to get this at an earlier stage so that the House will know exactly what is the position between Committee stage and Report stage.

§ Mr. Jay
Could the right hon. Gentleman tell us approximately what are the sums involved in both the increase, and the reduction he proposes in Excess Profits Levy? I would suggest that he is asking the Committee to approve, tomorrow, some sweeping changes in taxation, about which we have heard nothing until tonight, and it would help if we could at least be told that.

§ Mr. Butler
I am not asking the Committee to agree to sweeping changes in taxation. But this is so complicated, I could not give an answer in 20 minutes. I am, in most cases, trying to meet Amendments put on the Order Paper by hon. Members on both sides about E.P.L. When we come to the Profits Tax, I shall go some way to meet certain Amendments on the Order Paper, and I would rather explain the whole procedure under which this is worked out under Clause 31; the matter will not be debated until Thursday, when the House has had a full explanation.

§ Mr. Butler
I beg to move, "That the Chairman do report Progress and ask leave to sit again."
I think we have made very good progress, and that we might adjourn our deliberations at this stage. I should like to thank right hon. and hon. Members for their co-operation.