§ 14. Mr. Kershawasked the Chancellor of the Exchequer what proposals he has after the introduction of the corporation tax to restore to charities the possibility of recovering the tax already paid on sums covenanted to them.
§ Mr. CallaghanAs I stated on 8th December, charities will continue to be entitled to exemption from Income Tax, and will therefore be able to claim repayment of Income Tax suffered by deduction.
§ Mr. KershawDoes not the right hon. Gentleman appreciate that if companies which make donations to charity have to forward to him the tax relative to their donations at the time, they will 13 have to be almost twice as generous as now in order to give the charity the same benefit? Are not charities likely to be very hard hit by the right hon. Gentleman's proposals?
§ Mr. CallaghanI wonder about this. Is it really the case that charity will flow from bountiful breasts only provided that the Exchequer pays part of the cost?
§ Mr. William ClarkIs not the right hon. Gentleman aware that if a company covenants to give a charity £100 net a year, the company's income to pay that £100 at the moment is £216, whereas, with the introduction of the corporation tax envisaged for the next Budget, that gross income will have to be about £280? Must not that militate against industry making covenanted payments to charity?
§ Mr. CallaghanWe will be able to debate this subject. To start with, I do not accept the hon. Gentleman's figures. Nor will all companies be worse off; many will be better off.
§ Mr. William ClarkWill the right hon. Gentleman take it from me that, deducting 15 per cent. Profits Tax and Income Tax at 7s. 9d. in the £ on the decreased balance, a covenanted £100 net to a charity is derived from a gross income of £216, whereas, with a 35 per cent. corporation tax—if it is 35 per cent.— and then Income Tax at 8s. 3d. in the £, the gross income will have to be £280 in order to give £100 net to the charity and that the charity will be able to reclaim only £78?