New Clause. — (Amendment of S. 27 of Income Tax Act, 1945.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 6th July 1949.

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Photo of Commander Sir Peter Agnew Commander Sir Peter Agnew , Camborne 12:00 am, 6th July 1949

I beg to second the Motion.

Section 27 of the Income Tax Act, 1945, provides for a system of annual allowances. The annual allowance is based on the working of a rather complicated formula under which a fraction is computed; it is made up, in its numerator, of the output of the mine for the basic period, and, in the denominator, the figure representing that same output which has to be added to the total future potential output of the mine.

We have been very largely prompted to put down this Clause by the fact that in many kinds of extracting industries, and noticeably so in the case of tin, tungsten and lead, it is extremely difficult, if not impossible, to forecast with any accuracy at all what the total future potential output of the mine can be. It is felt, in view of that, that the existing system of annual allowances will tend to be quite inadequate in the amount of tax relief it will grant.

The Clause substitutes, at the option of the mining company, in the case only of tin, tungsten and lead mines, a new system under which a direct depletion allowance is given. This is based on an allowance at the rate of 25 per cent. of the actual output of the mine during any basic period. As tax relief, this amount, though more substantial than that given by Section 27 of the Act, is estimated to furnish only a very modest amount of relief—and one that is not likely to cost the Chancellor very much if this Clause is inserted in the Bill.

It is no coincidence that this Clause has been seconded by an hon. Member in whose Division there is metalliferous mining—one of the Cornish Divisions. We feel that at a time such as the present, when never was there a greater need to exploit to the full the resources which lie in our soil and beneath it, the Chancellor, in giving a stimulus to the exploiting of every source of our home wealth, will be assisting not only his Budget in future years by the increased yield of taxation which will be brought in, but will also be assisting in the solution of the economic crisis which was explained to us today.