§ Mr. Trewasked the Chancellor of the Exchequer what decision he has reached about possible deferment of industrial investment until next year when, because of the proposed change in the corporation tax, the tax allowances may be worth as much as 25 per cent. more than now.
§ Mr. Patrick JenkinMy right hon. Friend gave this matter careful thought when framing his Budget proposals, and I have looked at it again in the light of representations made to us subsequently.
The only measure which the Chancellor would regard as practicable would be to provide yet a further uplift in the allowances which he increased this year to 100 per cent. for the country as a whole. Any such uplift would have to apply to all investment made this year, at least where the allowances were set against current profits, and would, therefore, be very expensive. The cost of the minimum increase which would be necessary if the case as put were to be met—to increase the allowances by one-eighth—might be as much as £160 million. I consider this too high a cost to pay to prevent the deferment, perhaps for only a few months, of what, on the best judgment available to me, is likely to be a very small amount of marginal investment.
Given the large new incentives in the Budget and the present prospects of industrial growth, I have no doubt that well advised companies will see that the commercial risks of deferment, including loss of profits, are much greater than any prospective tax benefis.
546W1972, divided into whisky, other potable spirits, British wines, imported wines, and beer.
§ Mr. HigginsThe net quantities on which duty has been paid are as follows: