§ Mr. Mike O'BrienTo ask the Chancellor of the Exchequer (1) if he will introduce proposals to use the tax system to control very large salary increases for corporate directors and managers; and if he will make a statement; [9735]
(2) if he will introduce proposals to restrict the ability of a corporation to deduct as a business expense an increase in the salary of a director or manager which is not approved by shareholders. [9736]
§ Mr. Andrew SmithSalary levels are a matter for the organisation concerned and its shareholders, not for the tax system. In general terms the business tax system does not seek to distinguish between one sort of expenditure and another but tests for tax relief by reference to whether or not the expenditure was incurred for business purposes.