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Inland Revenue

Volume 436: debated on Tuesday 15 April 1947

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If we take the Inland Revenue this year, on the existing basis of taxation, the yield of the Income Tax will be less by about £48 million than it would have been but for the Income Tax concessions made in my last two Budgets. The main part of the effect of these concessions has been felt already, but I must now allow for their effect in a full year, and, therefore, for a decline of the Income Tax yield, which I put at £48 million this year. On the other hand, I count upon a growth—or my advisers count, and I accept their judgment in these matters—of £42 million over last year due to a further growth of taxable incomes—we are not all broke yet—and particularly of trading profits. Therefore, balancing the £48 million loss against the £42 million gain, I assume a total yield from Income Tax this year of £1,150 million—quite a comfortable sum. From Surtax I count on an increase over last year of £4 million, making a total of £80 million; and from Death Duties an increase of £7 million, making a total of £155 million. I count on an increase of £2 million from Stamps, making a total of £40 million, and I count on a small item of £r million from miscellaneous Inland Revenue duties.

Excess Profits Tax and Profits Tax together yielded, last year, £358 million; this year, I expect only £200 million from those two duties together. The Committee will, of course, recall that the rate of Excess Profits Tax was reduced as from 1st January, 1946, to 6o per cent., and that, as from 1st January this year. this wartime duty was finally dropped. We shall get a bit more for a number of years, but it will not be much better than a trickle, from E.P.T.; but in this coming year I still expect a substantial figure, namely, £200 million from E.P.T. and Profits Tax together. Therefore, the grand total for the Inland Revenue Duties adds up to £1,626 million, a drop of £151 million, or just on 9 per cent., on last year's yield.

The Committee will, I think, be interested to know that the payment of E.P.T. refunds is now nearly completed. We spent much time last year discussing the details and the conditions of those repayments. £184 million was paid last year under this head, and I hope to pay a further £60 million this year. Allowing for a small residue of cases that will take longer to settle, we shall, this year, reach the end of this refunding operation—so beneficial, it will generally be agreed, to British industry. The Committee will remember that it is a condition of these refunds that they shall be used for the re-equipment and development of industry, and shall not he dispersed in dividends.