HC Deb 29 November 1916 vol 88 c352W

asked the Chancellor of the Exchequer if his attention has been drawn to the effect of the Excess Profits Duty upon the investment of spare funds in Government securities; is he aware that a rubber company which desired to invest £10,000 in 5 per cent. Treasury Bills found that, as a result of doing so, its capital would be regarded as correspondingly reduced and its assessable profits increased by £1,000, making it liable to an additional £600 of duty; that as the income derived from the Treasury Bills would be £500, the company would be £100 a year worse off through investing in Treasury Bills than if it left the £10,000 on current account earning no interest; and, in view of this discouragement to investment in Government securities, will he consider the desirabiliy of adopting measures to exempt such securities from the operation of the Excess Profits Duty rules as regards investments?


My attention has been called to this matter. In the case mentioned the balance of advantage turns upon the question whether the investment would constitute a withdrawal of capital from employment in the business. The incentive to divert funds from business use to investment in Government securities varies in different cases, and the Excess Profits Duty frequently operates to lessen any disadvantage attaching to such action. I see, therefore, no sufficient ground for taking measures of the character suggested.