§ I now turn to measures in the field of direct taxation.
§ First, I propose that surpluses derived by companies from mutual trading should be taxed. This was intended to be the effect of a Section in the Finance Act, 1933, which was found by the courts to have, in part, missed its aim. The Royal Commission under Lord Radcliffe thought that the original intention should be restored. The matter is of greater importance now than it was when the Royal Commission reported because a recent legal decision has opened up the possibilities of abusing the present position for purposes of tax avoidance and this is already being exploited.
§ I estimate the yield from this proposal at about £5 million in a full year and £3 million this year. The position of the ordinary co-operative society, which has been liable to tax since 1933, will not be affected. More important than the immediate yield is the safeguarding of the revenue against future avoidance.