Clause 24. — (Rates of Profits Tax, etc.)

Part of the debate – in the House of Commons at 12:00 am on 11 June 1951.

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Photo of Mr Oliver Lyttelton Mr Oliver Lyttelton , Aldershot 12:00, 11 June 1951

I want to make it quite clear at the outset that we do not object to this Clause because it is a tax upon profits, but because of the effect it will have upon industrial capital. We are against the cupping and bleeding of industry to the present extent. It means that if a company distributes all its profits, the Exchequer takes 66 per cent. If the company distributes none, it takes 52¾ per cent. of those profits This process will destroy industrial capital and the ability of companies to expand.

The Chancellor of the Exchequer the other day tried to waive aside this matter of the depletion of industrial capital. He pointed out the large capital formation which has taken place since the end of the war, in which, of course, he was quite correct. With that I entirely agree, and I would hasten to add that the depletion of industrial capital has not given industry great concern, although it has given them some concern, until the last 18 months when rising prices have had startling effects upon the true profits and fortunes of joint stock companies in industry.

Before I get on to that point, I want to say that we pride ourselves in this period of re-armament on trying to pay our way out of current revenue. I think the Chancellor would claim that is what he is doing; but in that matter, of course, he disagrees very sharply with the hon. Member for Edmonton (Mr. Albu), who treated us to a little speech the day before yesterday, when he produced some rather damp cracker out of his handbag; and he appears, as he is not in his place, to have been trying to get away from the smell the damp cracker ever since.

What the hon. Member for Edmonton says is that in these times companies must raise capital in order to maintain their present assets. There is a grammatical expression called "meiosis", which means saying something very severe in a rather refined way. What the hon. Member for Edmonton, who is a naked inflationist, says is that companies must raise capital in order to maintain their assets. What he really means is that they must raise capital to pay their taxes, so that that would have very much the same effect, although perhaps not quite the same, if ever the Government floated a defence loan.