The Press Monday, February 7, 1921. Excess Profits Duty.

Press, Volume LVII, Issue 17063, 7 February 1921, Page 6

The Press Monday, February 7, 1921. Excess Profits Duty.

The British Chancellor of the Exchequer can rarely have made a more popular announcement than his statement at Birmingham last week that the Government do not intend to renew the excess profits duty. This duty was first imposed towards the end of 1915 to provide funds to meet the cost of the war. It is charged on the amounts by which the profits arising . from aiiy trade or business, except Irasbandiy, offices or employments, and professions in which no capital expenditure is required, exceed by more than £2OO the pre-war standard of profits, based on the returns on the average of ■ any two of the three trade years immediately preceding the outbreak of war. The rate of the duty has varied considerably since it was first imposed, beginning at 50 per cent, over pre-war standards, rising in the following year to 60 per cent., then to 80 per cent., after which it was reduced to 40 per cont., only to be raised again last year to its present figure, 60 per cent. It has produced very large amounts, varying from £131,000,000 to £290,000,000, f the current year's, return being estimated at £220,000,000. The retention of the duty was .the subject of sharp discussion when last year's Budget wa# before the House, but the Chancellor could not see his way to forgo a levy • that brought in so large a' sum to the Treasury. The change may be due in part' to the calmly reasoned arguments of such influential and responsible bodies as the Federation of British Industries. As the outcome of .a conference of that Federation in London in December, attended by delegates from affiliated manufacturers' associations representing 22,000 business firms in all partß of the kingdom, a deputation waited on Mr Chamberlain and put the case for the abolition of the duty very strongly to him. Mr Peter Rylands, the spokesman of the deputation, pointed out that during the war manufacturers, recognising that war conditions had in some industries created monopolies and the opportunity for making large profits, acquiesced in the Government's taking a large slice out of increased profits. But conditions had changed, competition was again becoming effective, and business was undoubtedly falling off. Furthermore, manufacturers needed tjhree or four times more floating capital to run their businesses than was the case before the war, and this capital could only be found in the proceeds of the sale of their products, of which proceeds the Government were taking a large share in the form of heavy taxes. Mr Rylands claimed that to single out industrial production for special taxation, in the abnormal conditions now existing and threatening to become worse, was disastrous. On that occasion the Chancellor was not very reassuring. His defence of his policy of paying off large sums of the country's indebtedness in good tinies so as to lighten the burden when trade was not so good would possibly have appealed more strongly to the manufacturers' representatives if the future of industry had seemed brighter, but as matters are Mr Chamberlain'B plea was beside the question. The Minister, however, would not commit himself" further than by promising that the Government would do their utmost to so reconstruct expenditure as to make it possible to lighten the burden at present borne

by industry. "What has since happened to cause the Chancellor to promise definitely to abolish a duty that circumstances no longer warrant we possibly shall not learn until he brings down liis Budget. The new anti-dumping duties which will almost certainly be a feature of that Budget will not come within a long way of filling the gap caused by the absence of the excess profits duty.