§ Sir B. FALLEasked the Chancellor of the Exchequer whether, in consequence of the system of assessment on the basis of a three years' average, trades and businesses have paid in Income Tax since 1914–15 over £800,000,000 less than they would have paid if the assessments for each of the years had been based on the profits of the previous year?
Mr. CHAMBERLAINNo, Sir. The statement was attributed to me in a published summary of the observations that I made to a deputation, but for this summary, which was inaccurate in more than one respect, I was not responsible. The actual facts are that the profits on which trades and businesses have been assessed since 1914–15 on the basis of a three years' average are £800,000,000 less than the profits which would have been assessable if the assessments for each year had been based on the profits of the year of assessment. If the assessments had been made on the profits of the preceding year, £450,000,000 more would have been brought into assessment than on the existing basis. In both these cases the figures given relate to the basis of assessment, not to the amount of the duty that would have been payable.
§ Sir W. RUTHERFORDasked the Chancellor of the Exchequer whether those companies, firms, and individuals who patriotically assisted the Government Loans by taking up War Stock and Bonds when appealed to, and who have now been forced to realise owing to the burden of taxation, are not being allowed to bring into account the actual loss incurred in such realisation in making up their accounts for the purposes of Income Tax and Super-tax; and, if this is the case, whether he will take such steps as may be necessary to enable these people 1185W who have incurred such losses to bring the same into account as legitimate deductions from profit?
Mr. CHAMBERLAINThe provisions of the Income Tax Acts governing the computation of liability to Income Tax (and Super-tax) preclude the admission of a deduction on account of a loss of capital, and at the same time impose no liability to tax in respect of a capital gain. In accordance with this principle, profits or losses on the realisation of investments do not enter into the computation of the liability to tax, except in the special case of a business which is mainly concerned in the buying and selling of securities,e.g., an investment company. The suggestion which my hon. Friend makes in regard to investments in war stock and bonds is thus in direct conflict with an established and general principle of the Income Tax law, and is not one which I can see my way to accept.