LIVELY DEBATE

Evening Post, Volume CXVI, Issue 28, 2 August 1933, Page 3

LIVELY DEBATE

THE TAX GATHERER

CO-OPERATIVE SOCIETIES

GOVERNMENT'S. PLAN

The Government resolution to levy income- tax on tho profits of cooperative societies provided a lively debate in the House of Commons. Tho Chancellor of the Exchequer inado it clear that the "divi" would not be touched, he having decided to deal with it as a trade expense. He said that tho counter-proposals put forward by tho co-operative interests would only yield '£120,000 to1 £150,000 a year, as agaiust £1,200,000 possible under the Eaeburn Committee's proposals. Mr. Chamberlain explained, that the purposo of the resolution was to authoriso legislation designed to carry out tho recommendations of tho Raeburn Committee on income tax in rolatiou to co-operativo societies. Ho said that .tho Baeburn Committee came to tho conclusion, and stated in its report, that what was familiarly known as tho "divi" was analogous to a trade discount such as might bo allowed,by an ordinary trader. "Tho Government," tho Chancellor added, "is of opinion that this conclusion is sound, and fully accepts it. But tho point I particularly want to emphasise at this moment is that tho reasons given'- by the Eaoburn Committeo for holding that the 'divi' was ljot a taxable profit have nothing to do with, .tho. .so-.caUcd principle of mutuality. "Tho 'divi' is not taxable profit beeauso it is a trading expense. .That is nothing to do with the question whether the 'divi' is earned by mutual trading or not." UNDISTRIBUTED INCOME. Mr. Chamberlain explained that the Baeburn" Committee set out a'useful table in its report which showed that the" co-operative societies were iv the same positioa as companies as regards Schedules A and B, in which they paid income tax,-but as regards Schedules C and D, whereas the companies paid income tax the co-operative were exempt. • ' : "This difference," proceeded Mr. Chamberlain, "between the co-operativo societies and the companies relates only to undistributed income, because in so far as' tile societies distribute income in tho shape of interest on share capital or interest on loan that interest is already taxed under the.existing law. "Therefore, we.are.dealing not with tho distributed but with the undistributed income of the- societies." COUNTER-PROPOSALS. Dealing .with, the counter-proposals put forward by the co-operativo interests, Mr. Chamberlain said that he had them examined,. and it was esticated that the revenue they would produce would' •be ' something between £120,000 and £150,000, as against £1,250,000 which was estimated to bo produced by the recommendation of the Raeburn' Committee. Tho whole of that comparatively small. revenue would, be furnished by two societies of special kind connected with finance. The whole of the rest of tho societies, wholesale and retail, engaged in the distributing trade would pay no more than they did today. That was a counter-proposal which the Government could not possibly accept. "I havo no prejudice whatever against the co-operative movement," he - declared, "but I can see no difference in equity between tho position pi;, the co-operativo societies and that of an ordinary tradiiig company." The Government, he continued, had accepted the principle of tho recommendation of tho Baeburn Committee without cither attacking or denying tho principle, of mutuality. What it was doing was to define the area in which that principlo was operative, and it was excluding from that area undistributed trade profits of. all incorporated societies or companies. OTHER ORGANISATIONS. As to the question, of what other societies or companies might be affected by theso proposals if they took, for instance, workmen's clubs, many of Which were registered under tho Industrial and Provident Societies Acts, it had been held by the Court of Appeal that, being carried on on the social side on tho usual mutuality principle, they did not carry on a trade or business, and therefore such clubs Wero exempt so far as their surpluses wero concerned. They'were, and would be under the proposals of tho Government, liable on their investment income. Bat there, again, broadly speaking, the liability would be offset by the relief which they were able to claim, upon the payment of interests to the lenders, or depositors of the club; ' •.':■'■ ° The principal societies which would be affected would be tho mutual insurance companies and societies, but he must point out that so far as those companies which, were dealing with life assurance were concerned their investments wero already liable to income tax, and their position .was not touched. With regard to the rest, they would pay income tax: in exactly the same way-as non-mutual insurance companies paid today. ' . SOME EXCITEMENT RAISED. " Later in the debate, there was some excitement caused by Mr. Macq'uisten, who reverted to his old charge of largescalo corruption over the purchase of automatic machines. Ho was scoffing at the censures of his statement and maintaining it. "I mentioned no name," he protested, when tho Socialist benches roared with many voices: "Say it outside." ' Mr. Macquisten gave facetious reasons why he should not say it outside, and drew an odd analogy between his charges and Samuel Plimsolls historic attack on coffin-ship owner:;. Thence, ho rocounted the offences and the sentences passed in tho recent Newcastle prosocutions over tho conduct of cooperativo business. Mr. Morgan Jones fiercely demanded of the Chairman: "Has this any relevance?" and another member of the Socialist front bench, Mr. Lawson, was loud, and the ranks behind-joined in. It was, however, reserved for Mr. Isaac Foot to impose something like peace with a reasoned question how these imputations could be in order. ' Mr. Macquisten was' steered- away by tho Chairman to protestation that there was tremendous laxity in the cooperative movement, and tho best proventative would bo for the tax collector to come in. He accused the movement of large speculation, and suggested | a "Select Committee to go through its books for the last twenty years." By that time the Socialist indignation had taken a scoffing tone. "TRAITOROUS AND TREACHEROUS." At another stage of tho debate Mr. Cove, a Labour member, referred to a "National Government led by a traitorous aud treacherous Prim© Minister," when there were cries of "Oh!" and "Withdraw!" Sir P. Ford asked if the hon. member was. entitled to refer to any member of the House- ns "traitorous and treacherous." (Ministerial cheers.) Tho Deputy-Chairman (Captain Bourne): The expression "traitorous" is distinctly out of order, and I must ask tho hoii. member to withdraw. ■ Mr. Cove: Traitorous and treacherous to tho co-operative movement. I can-

not withdraw that. (Opposition cheers.) I believe it. The Prime Minister, continued tho hon. member, had run away. Ho could not, however, get away from his promise. Ho would leave office, not only with tho contempt and disgust of tho Labour Party, but also with the bitter hatred of large numbers of co-operators who saw in his action treachery to the great movemont which he once supported. (Opposition cheers.) Viscountess Astor said that tho tax was a blunder of tho first order, and she would vote against the Government. Tho Committee divided, when there voted: For the resolution, 325; ngaiust, 109; Government majority, 210.

Captain W. 11. ITaitnmnn and Jlr. A. B. Jloore, two new members of the executive of the Navy League, wore welcomed iit the first meeting of the new executive yesterday by Mr. A. E. Brown, who presided. The chairman of the executive has not yet been chosen.