“EXCESS PROFITS"

Dominion, Volume 33, Issue 282, 23 August 1940, Page 8

“EXCESS PROFITS"

The statement by the Minister of Finance that proposals relating to a tax on excess profits will be placed before Parliament at an early date has revived speculation as to the Government’s intentions in this respect. Mr. Nash stated that the tax will apply to incomes for the current year, but apparently his Budget figures make no allowance for the revenue he expects to derive from this source. It apparently will be a plus item to the huge and record sum of £54,000,000 which fit is proposed to collect in other forms of taxation this year. In his Budget reference to the subject the Minister of Finance gave no indication of what, would be deemed to constitute “excess profits.” All he then said was that proposals for the establishment of the procedure necessary to transfer to the State “the whole of any excess profit made during the’ war period” would be laid before Parliament at a later stage. In Britain the excess profits tax has been framed with the idea of safeguarding the normal returns of investors in company and other undertakings. A minimum return of from 6 to 8 per cent, is provided for as a general basis before the excess profits tax is imposed; and in the case of certain classes of extractive industries with a wasting asset, such as coal-mining, the minimum return proposed is on a higher scale. The idea that excess profits resulting solely from the war should be taken by the State for war purposes has met with no strong opposition. War profiteering is universally condemned, and properly so. It is equally right, however, that the legitimate interests of industry and business should be fully safeguarded by a just and equitable definition of the rather loosely-used term “excess profits.” Presumably the course followed in Britain to ensure proper safeguards, including a minimum return to investors before the excess profits tax becomes operative, will be adopted here. In any case it is desirable that the fullest possible opportunity should be afforded Parliament and the country of examining the details of the proposed legislation before its provisions become operative.