§ Mr. TOUCHEasked the Chancellor of the Exchequer if, to remove misunderstanding as to the method of assessing the 50 per cent. of profits to be taken by the Government, he will explain the application of his proposals in the representative case of a manufacturing concern whose profits, for the purpose of assessment for the year 1914–15, were as follows: Year to 31st December, 1911, £15,000; year to 31st December, 1912, £20,000; year to 31st December, 1913, £30,000; and whose average profit for assessment for the year 1914–15 was therefore £21,600, and whose earned profits for the year to 31st December, 1914, were £35,000, such profits coming within the period of 1st September, 1914, and 1st July, 1915, mentioned; will he say 740W whether the company would be assessed for 50 per cent. of the profits made in the year 1914 over the average profits for assessment in the year 1914–15, making the sum payable to the Government £6,700, whereas the increase in the profit for the year was only £5,000, and only five months of the year came within the War period; will he say whether the company also have to include for the purpose of average in the following year the whole of the profits for 1914, of which the Government will have taken £6,700 by way of surplus tax; and, to avoid an apparent injustice to a growing business, will he give favourable consideration to the principle of taking as the datum line the assessment for the year 1914–15, or the highest year's profits included in the average, whichever may be the greater?
§ Mr. McKENNAI do not think the details of the proposed Excess Profits Tax can be usefully discussed by way of question and answer. I may, however, say that in the hypothetical case put the taxable amount would be £13,400 less £100, 50 per cent. of which would be £6,650. This amount shown as an expenditure in the subsequent accounts would be allowed as a deduction, with the result that no Income Tax or Super-tax would be payable upon it, though Income Tax and Super-tax would be payable in respect of the balance of excess profits received by the taxpayer.