HC Deb 09 August 1966 vol 733 cc289-90W
Sir C. Osborne

asked the Chancellor of the Exchequer if he is aware that a public company, whose name has been sent to him, has just announced sales reductions for the first half year of £432,000, net profit reduction of £511,000, and that this type of profit-margin squeeze will be general throughout British industry; in view of the fact that the dividend cut will result in less revenue from taxation of profits and dividends, and that the Budget estimates will be falsified, if he will now impose severe cuts in current nonproductive Government expenditure; and if he will make a statement.

Mr. Diamond

The net profit reduction in the case mentioned will not affect the yield of Corporation Tax this year because tax on those profits will not be payable until 1967–68. For the same reason any reductions in the profits of other companies for accounting periods ending in this financial year will have little or no effect on the Budget estimate for 1966–67. It is too early to say to what extent reductions in dividends will cause the yield of Schedule F tax to fall short of the estimate. The Government will continue to exercise strict control of public expenditure, and will have regard to all relevant economic factors, including forecasts of revenue.