§ Mr. R. A. Butler
The figures quoted reflect the alterations in the rates of Profits Tax made in the Finance Act, 1952. The tax collected in 1952–53, was nearly all at the 1951 rates of 50 per cent. on distributed profits and 10 per cent. on undistributed profits, while the collection in 1953–54 was mainly, and the estimate for 1954–55 almost entirely, at the lower rates of 22½ per cent. and 2½ per cent., respectively. The reductions should not, however, be looked at in isolation as indicating a net loss of166W revenue of the amount mentioned in the Question.
Profits Tax at the rates applicable up to the end of 1951 was allowed as a deduction from profits in computing Income Tax but tax at the current rates is not so deductible. Allowing for this change the net yield of Profits Tax in 1952–53, on a basis comparable with the estimate of £172 million for 1954–55, was about £195 million. In addition, the changes in rates and basis in 1952 coincided with the introduction of the Excess Profits Levy which yielded £3 million in 1952–53, £66 million in 1953–54 and is estimated at £60 million for 1954–55.