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Company Reserves

Volume 465: debated on Tuesday 24 May 1949

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asked the Chancellor of the Exchequer how much was last year put to extra reserve by companies after allowing for taxes.

As the amount reserved for taxation is not available for the reduction of prices, was it not misleading of the right hon. and learned Gentleman the other day to include it in the amount so available?

Of course, it is available for a reduction of prices, because if it had not been earned there would not have been any tax to be paid.

If the Chancellor disagrees with what I said on the last Question, which is also relevant to this Question, would he oblige by reading his Second Reading speech on the Finance Bill last week?

Does not the right hon. and learned Gentleman think that his statement that £1,215 million profits were available for price reduction would, in the light of what he has just said, possibly tend to mislead one or two people?

I should have thought not. The whole of these extra profits came out of the prices for which goods were sold. If those prices had been reduced by whatever the sum was, there would have been £1,215 million less profits and, therefore, there would have been £700 million less tax to be paid on the profits. The tax was paid because the profits were earned.

Could the right hon. and learned Gentleman tell us how he would have raised that £700 million if that tax had not been paid?

Had prices been reduced it might not have been necessary to have so disinflationary a Budget.

The Chancellor of the Exchequer said, "By whatever sum prices would have been reduced." No doubt before he made the statement in his speech he had got some estimate as to how much they could have been reduced. Will he now tell the House and the country by how much they could have been reduced?

I have no such estimate and naturally should not have. What I did say was that there was in some cases a surplus which could have been used for price reduction.

If prices had been reduced not only to the extent of eliminating profits, but also to the extent of producing losses, would that have been a good thing in the right hon. and learned Gentleman's opinion?

It is very difficult to say. If the hon. and learned Member will give me an exact instance of what he is thinking, I should be able to answer the question.

Will the right hon. and learned Gentleman be a little more consistent in this matter of profits by backing up his strong views with a little more resolute action?

I consider that taxation up to 60 per cent. of profits is quite resolute action.

How does the right hon. and learned Gentleman apply his peculiar and tortuous argument to Purchase Tax in this connection?

I am afraid that that has nothing to do with the point we are now discussing.

Does not the right hon. and learned Gentleman think that he was guilty of making a highly Jesuitical statement?