DEFENCE EXPENDITURE

Greymouth Evening Star, 28 April 1937, Page 7

DEFENCE EXPENDITURE

CHANCELLOR’S STATEMENT

EFFECT ON INDUSTRIES

[BRITISH OFFICIAL WIRELESS]

RUGBY, April 27. The Chancellor of the Exchequer spoke in the Commons on rhe Budget resolution relating to the proposed national defence contribution. He scouted the claim of the Opposition that the proposal was the main cause of industrials and other ordinary shares on the London Stock Exchange. He reminded the House that Continental bourses were likewise disturbed, where no such proposal was in question, but he admitted the unceitainty regarding the new tax was an element in the London markets depressed condition. Mr. Chamberlain expressed surprise at the extent of the danger it had been suggested would be done, by what he regarded as a mild and moderate proposal. The Treasury was in a reasonably good position to estimate the effects of the proposed taxation, and it was not expecting a higher yield than between 20 and 25 million pounds in the financial year 1937/38. Surely that was not an intolerable burden on industry. ; : In reference to the anticipated effects of defence expenditure on the expansion of industry, Mr. Chamberlain said that the exceptional expenditure would have an end. It was not unlimited. ‘lf one is to talk seriously about this matter, we are not seeking to dominate the world. We are seeking only to make ourselves and our Empire communications safe, therefore I feel justified in saying we are not faced here with unlimited or an indefinite amount of expenditure.” He added that he was receiving the comments of financial and industrial worlds, and would study all this data in the most sympathetic manner. Meantime,, he had to go somewhat further into two points. ‘The first related to the years’ profit standard which in the Budget statement were 1933, 1934, 1935. The Chancellor said he never meant that suggestion to become a modification, and he was prepared to reconsider it either by way of some choice given to the tax payers to choose between the different years, or .by adding other years, or a combination of both, but he would not commit himself at this stage. The second point, related to the alternative capital standard, and to the suggested rates of profit, on that basis to which the tax would be adjusted. The Chancellor said he had no intention of withdrawing the proposals, which he himself regarded as mild and moderate. Their actual yield must de-

pend upon the growth of profits. The " charge would he only one-fifth, where a firm was not over-prosperous. It was only where the growth of profits represented something'over 15 per cent, that the higher charge would operate. The profits standard would not be applicable to a large number of cases, for which the capital standard was created. Here confusion had arisen. Capital for the purposes of contribution was not share capital. It was the computed figure representing the costs of assets, subject to certain adjustments, The computation would take time, but once the capital standard was 'fixed, the basis would in the case of companies be six per cent., and in the case of firms and individuals eight per cent, upon that capital. PROFITS TAX APPROVED z LONDON, April 27. The profits tax resolution was agreed to in the Commons. The Finance Bill was read a first time.

CHEA*P MONEY.

(Received April 28, 2 p.m.) LONDON, April 27.

Applications for the new loan open and close on April 29. It is unlikely to appeal to the small investor, as the yield of the average life of nine years, is only 5 1-3 per cent., but the fact that the Government is able to borrow so cheaply is a tribute to the strength of Britain’s financial position.