Orders of the Day — Excess Profits Duty.

Part of the debate – in the House of Commons on 28th April 1920.

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Photo of Mr Austen Chamberlain Mr Austen Chamberlain , Birmingham West

My hon. Friend has never suggested any alternative. Bather later this year, before the Budget was introduced, the Federation made a proposal. Did it comply with my conditions? Was it a proposal for a graduated tax on profits, which commends itself to some Members of the House, at any rate? No, Sir, it was for a flat rate of tax on profits, regardless of the rate at which they were earned, and not on the profits of industry assessed to the Excess Profits Duty only, but on all earnings from trade, agriculture and the professions. That was not an alternative. That was shifting the burden on to other shoulders. I should add that they were specifically and vehemently opposed to anything in the nature of a graduated tax which involved a valuation of the capital in the business. It is not an easy matter; I do not like it for Revenue purposes, and they did not like it as taxpayers, and they were not prepared to encourage it. I must not at this stage go into the difficulties of a graduated profits tax. The treatment of goodwill, as I heard an hon. Gentleman mention a moment ago, is one of those things. There is the treatment of oldestablished businesses whose shares have for many years changed hands on the basis of their having long continued to pay very high dividends, so that they are purchased to return, say, 10 per cent. I only mention these matters to show that I am not so wedded to the Excess Profits Duty that I would not gladly accept a better alternative if you could find it. I have sought an alternative myself. I have enlisted the help of some of those most interested and desired them really to bring their minds to bear on this problem with a view to fulfilling conditions that are essential conditions. My right hon. Friend says that this year it brings in only £10,000,000, but, after all, if you do not get that this year you will leave the matter open till next year and then have to do something else. I cannot do that. I will do everything I can to promote economy and to cut down unnecessary expenditure. I recognise that at this moment—I was going to say the first duty—but, at any rate, I agree it is one of the primary duties. I beg the House to help me. Their neglect does not excuse us, but, if they do not help, they make our task much more difficult. I recognise the primary importance of economy.