§ Mr. Lubbock
asked the Chancellor of the Exchequer what estimate he has made of the percentage of net profits before tax which would have to be levied in the form of corporation tax so that the total revenue of corporation tax and income tax on distributed profits should be the same as the total revenue of Income Tax and Profits Tax for the year 1963–64, assuming that profit before tax and net dividends remain the same as from 1963–64; and what would be the additional revenue from a one per cent. increase in the corporation tax over and above this level, on the same assumptions.
§ Mr. Callaghan
A corporation tax at the rate of 35 per cent. would bring in revenue equivalent to the combined yield of income tax at 8s. 3d. in the £ on undistributed profits and profits tax at 15 per cent. on total profits. A charge of 1 per cent. in the rate of corporation tax would then affect the revenue by approximately £30 million. As I said in my 235W Budget statement, the main objects of the scheme will be to modernise the tax system, remove anomalies, and provide an incentive to plough back profits. It follows that the introduction of this new scheme is not intended to impose penal burdens upon the company sector. The precise rate of tax will be determined by the revenue requirements at the appropriate time.