§ Mr. Austin Mitchellasked the Chancellor of the Exchequer if he will estimate the saving to the Exchequer in 1984–85 of abolishing all allowances against corporation tax, including losses carried forward.
§ Mr. MooreEstimates of the reduction in corporation tax receipts in 1983–84 resulting from the existence of the main allowances and reliefs in that year were published in the Public Expenditure White Paper (Cmnd. 9143-II). They include capital allowances, which replace normal commercial depreciation, and reliefs in respect of the double taxation of profits earned overseas. It would be unrealistic to assume that a tax regime could be imposed which abolished all such allowances and reliefs, and the actual effect upon the revenue of attempting to do so cannot be estimated.
The Budget measures proposed by my right hon. Friend to abolish stock relief and phase out first year and initial allowances are of course accompanied by very substantial reductions in the rates of corporation tax. They are of a totally different nature from that supposed in the question. They are designed to encourage businesses to expand by taking advantage of the new lower rates of tax and by seeking out investment projects with a genuinely worthwhile return.