Business Efficiency (Bonus Awards)

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 27 February 1968.

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Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston 12:00, 27 February 1968

asked the Chancellor of the Exchequer what instructions have been given to the Inland Revenue regarding tax payable on bonus awards for suggestions to improve efficiency in individual business firms.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

Under a long-standing practice an award made to an employee for a useful suggestion made under an employer's suggestion scheme is not regarded as taxable if the amount is reasonable and it is not part of the regular duties of the employee to put forward such suggestions.

Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston

Will the Minister bear in mind that the instructions which he has outlined are vague and fluctuating? Would he also bear in mind, if he is thinking of changing them, that it is unwise to impose penal taxation on suggestions for improving efficiency and output in industry?

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

There is no question of any penal taxation. The instructions are not vague, they are clear; and they are not varying, they are permanent. They are clearly understood by all concerned and draw a clear distinction between payments which are made in the ordinary course of duty and payments made outside the ordinary course of duty.

Photo of Mr Hector Hughes Mr Hector Hughes , Aberdeen North

Would it not be right that this tax should be borne by the industrialists who benefit from the suggestions made?

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

If industries benefit, as I hope they do, their production increases, their sales increase, their profit increases and so their taxation increases.