DEFENCE COST NOT INDEFINITE.

Horowhenua Chronicle, 29 April 1937, Page 7

DEFENCE COST NOT INDEFINITE.

CHANCELLOR EXPLAINS NEW PROFITS TAX. EFFECT ONTNDTJSTRY. (British Official Wireless). RUGBY, April 27. The Chancellor of the Exchequer (Mr Neville Chamberlain) spoke in the House of Commons to-night on the Budget resolution relating to the proposed national defence contribution. He scouted the claim of the Opposition that the proposal was the mam cause of the falls of industrials and otherordinary shares on the London Stock Exchange, and reminded the House that the Continental Bourses were likewise disturbed where no such proposal was m question, but he admitted that uncertainty regarding the new tax was an element in the London markets's depressed condition. He repeated his explanation of the vagueness of the scheme that the necessity of Budget secrecy had prevented his obtaining the advice he desired before completing the details. Mr Chamberlain expressed surprise at the extent of the danger which it had been suggested would be done by what he regarded as a mild and moderate proposal, and, claiming that the Treasury was in a reasonably good position to estimate the effects of the proposed taxation, said it was not expecting a higher yield than between £20,000,000 and £25,000,000 in the financial year 1937-38. Surely that was not an intolerable burden on industry. In reference to the anticipated effects of the defence expenditure on the expansion of industry, Mr Chamberlain said that exceptional expenditure would have to end. It was not unlimited. "If one is to talk seriously about the matter," he said, "we are not seeking to dominate the world. We are seeking only to make ourselves and our Empire communications safe. There- , fore, I feel justified in saying that we 1 ■are not faced here with an unlimited , or indefinite amount of expenditure. , There is a limit to it, and there is 1 therefore a limit to. the amount we have | got to raise." ] The Chancellor reviewed some of the , errors which had been made in the , Press. He was obtaining the informa- ] tion he required before he could state how the difficulties which had been ; urged would be met. He was receiving : ,the comments of the financial and j industrial worlds, and he would study ( all this data in a most sympathetic manner. i In the meantime he would go somewhat further into two points. The first related to the years of the profit ( standard, which, in the Budget state- : ment, were 1933, 1934, and 1935. The ( Chancellor said he was prepared to reconsider that either by way of some ( choice given to taxpayers to choose between the different years, or by add- ( ing the other years, or a combination of both, but he would not commit himself at this stage. 2 The second point related to the alternative capital standard and to suggested rates of profit on that basis to which tax would be adjusted. JSTO WITHDRAWAL OF PROPOSALS. ! LONDON, April 27. In the debate in the House of Commons on the profits tax provisions in the Finance Bill, the Chancellor of the Exchequer (Mr. Neville Chamberlain) said that he had no intention of withdrawing the proposals which he himself regarded as mild and moderate. Their actual yield must, of course, depend upon the growth of profits. The eharge would be 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 in a large number of cases lor which the capital standard had been created. Here confusion had arisen. Capital, for the purposes of the contribution, was not share capital. It was a coinputed figure representing the costs of assets and was- subject to certain adjustments. * The computation would take time, but once the capital standard had been fixed the basis would, in the case of coinpanies, be 6* per cent., and, in the case of firms and individuals, 8 per cent, .upon that capital. PROFITS TAX APPROVED. LONDON,■ April 27. The profits tax resolution has been agreed to in the House of Commons and the Finance Bill has passed the first reading. DEFENCE ISSUE A CHEAP LOAN. LONDON, April 27. Applications for the new defence loan of £100,000,000 will close on April 29. It is unlikely to appeal to small m- . vestors as the yield for an average life of nine years will be only £2 lis 3d 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.