§ Mr. David Mitchell
asked the Chancellor of the Exchequer what percentage of the corporation tax would raise the same revenue as the existing corporation 608W tax if all the allowanes set against corporation tax liability were abolished; and if he will list the allowances taken into account in arriving at this figure.
§ Mr. Robert Sheldon
Deductions from trading profits to arrive at taxable profits include ordinary business expenses such as purchases, wages, rates and interest charges as well as capital allowances and stock relief. If all these deductions were not given, the resulting tax would be in the nature of a turnover tax rather than a corporation tax, but in any case information about the equivalent tax rate is not available.
The hon. Member may have stock relief and capital allowances specifically in mind, but no estimate is possible, because some relief would in any case have to be allowed for normal depreciation. For stock relief alone it is estimated that the corporation tax due on profits arising in 1976, allowing for repayments of tax on account of losses carried back to earlier years, would be about the same if there were no stock relief and the corporation tax rate were 38 per cent.