ARMAMENT TAX

Grey River Argus, 24 April 1937, Page 9

ARMAMENT TAX

ON BUSINESS PROFITS British Chancellor IN CROSSFIRE OF CRITICISM. (Aus. & N.Z. Cable Assn.) (Received April 23, 8.45 p.m.) LONDON, April 22. In the House of Commons, Rt. Hon. N. Chamberlain (Chancellor of the Exchequer) after listening to a crossfire of criticism, said: It is necessary for the country to realise that the total cost of the rearmament cannot be cast on posterity. Everyone must hope that some means may be found of ending the armaments race.

Referring to thc national defence contribution in the form of the tax on business people, he said: It is not intended to be a crippling or a penalising tax, or to create injustice as between one class of firm and another. If I can be allowed to make inquiries to ascertain the possible dangers, then I had better have a certain amount of elasticity to conform with what may come to my notice.

A wide range of securities, which had not yet recovered from the effects of the gold price scare, offered no resistance to the tax uncertainties.'

A market statistician told the Aus. tralian Associated 'Press that he estimated securities had depreciated by over tw 0 hundred million sterling yes. terday. Shell transport alone lost over six millions during the day’s trading. “The Times’s” City Editor and other authorities consider it will be a long time before the markets recover their poise.

Criticism is chiefly directed at the unfairness of the incidence, of the tax, Not only does it penaliste “recovery” grades, but allows shareholders Hi companies domiciled abroad to escape, , thus the majority of South African mining companies will not be taxed, while West African and Rhodesian are liable. The Zinc Cor. poration is liable, while Broken Hills are not affected. The anomaly is reflected in the former’s shares which declined ton shillings. The City expects that one effect of the tax will be t 0 lead many companies operating abroad to transfer their domicile from England. The Stock Exchange remains depressed. Preoccupation with the Budget cans, ed two important developments on the Continent to pass almost unnoticed. Forward francs are quoted at 113 to £l, which is below the legal devaluation limit. The Paris Bourse is weak,

s political uneasiness, labour troubles and bad trading figures affected confidence. On the Prague Bourse prices collapsed. Because of over-speculation, many small operators were wiped out. GOVERNMENT CRITICISM. (British Official Wireless.) RUGBY, April 22. There is considerable criticism, particularly by Conservation members in he Commons, of certain features of the new taxation on rising profits, which is announced in the Budget. The points raised by critics of the national defence contribution were dealt with, last night, by Mr. Colville, who said that those liable to this new ax, which will apply t.b all companies, firms and individuals making over £2OO a year profit, will be entitled to cleet “to pay either upon the growth of profits, compared with the average for 1933-35, nr on the excess of their profits above a return of six per cent, on their capital in tho case of companies, and eight per cent, hi the case of individuals and firms. It i s proposed the tax should be graduated from one-fifth to one.third of thc growth of profits, proportionately t 0 the actual level of prosperity, the highest rate being payable in respect of returns on capital exceeding 15 per cent.

Mr. Colville said that capital would be the valuation of assets employed in the business, less such items as debentures and loans. Reserves would hot be included, unless invested! m the assets employed in the business. Profits would be as assessed for income tax, less interest on debentures and on loans, but not interest on preference shares. He noted that the tax would be temporary. He added that although the Government would have liked to distinguish between armament. firms and others, it was not practicable. Newspapers expect that many amendments to national defence contributions proposal will be advanced when the Finance Bill comes under discussion, and that, meanwhile, consultations will take place on certain aspects of the proposal. It is, however, stated in the Press, that the Government Whips are satisfied that, in principle the new impost will be endorsed ‘.by ian overwhelming majority of Ministerial votes, when the division is taken. British War Debts TO UNITED STATES. NOT YET DONE WITH. (Received April 23, 11 p.m.) WASHINGTON, April 23. Officials here regard the discussions of the war debts in the British House of Commons as confirming their view that this question has not been closed. They believe that the issue eventually will arise for treatment, but they are not prepared to predict when. The officials denied emphatically that there has been any move, either formal or informal, since the British Note of December last. The conviction was that the Commons debate reflected considerably the. opinion formed during the Alexander conversations with New York business leaders in September last.