EXCESS PROFITS AND ALL-IN WAR

Evening Post, Volume CXXXIV, Issue 106, 31 October 1942, Page 6

EXCESS PROFITS AND ALL-IN WAR

(To the Editor.)

Sir,—While agreeing in part with the idea of your correspondent, Alister Bevin, under the heading "All-in War Effort?" I feel that his statement in regard to the operation of the excess profits tax calls for correction. He appears to imagine that under that Act a company which makes excess profits is permitted to retain 40 per cent, of those profits. The reference to 40 per cent, seems to arise from the provisions (since repealed) which provided that the tax should- be 60 per cent, of the excess profits after deducting from those profits the income tax and social security and national security taxes in regard thereto.

This rate has now been increased to 75 per cent., but where the greatest fallacy lies is in the fact that before excess profits are calculated the full income and social security and national security taxes have been deducted. When it is remembered that any company having an income in excess of £ 7950 pays * income and social security and national security taxes which total 14s 2-3 d (fourteen shillings and two-thirds of a penny) in the £1, it will be seen that without any excess profits tax the Government takes more than 70 per cent., leaving the taxpayer with less than 30 per cent. When such a company has to pay excess profits tax the result is much worse because for every £1 of excess profits made there is left in the company's hands only Is 5 5-6 d (one shilling and five pence and five-sixths of a penny). The position being as I have indicated, the whole of Mr. Bevin's arguments fall to the ground. He may well be forgiven his ignorance of this high taxation when it is realised that many members of Parliament do not themselves appreciate the full effect of the taxation which they themselves impose.—l am, etc., G. J. J. FEIL.