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Industrial Investment

Volume 531: debated on Thursday 28 October 1954

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19.

asked the Chancellor of the Exchequer what evidence he has that British industry is placing to reserve considerably less than industries in many European countries; which countries are shown by his investigations to be reserving more; by how much more than in the United Kingdom; and, in each case, how much of the total gross earnings are taken away by taxation, as compared with the United Kingdom.

The available evidence is to be found in publications of the O.E.E.C. and relates to the level of investment in this country compared with the United States and other European countries. Exact comparisons are impossible owing to differences of definition and tax structure, but there is no doubt that we are investing a much smaller proportion of our resources than the United States and that we are investing less than Germany and several other European countries.

My right hon. Friend has not answered one important point about which I asked him. I asked whether foreign industries were paying as much in taxation as British industries, and my right hon. Friend has not answered that question. Further, will he bear in mind that if company profits were not taxed so heavily, more would be put to reserve, and that if our level of taxation were no higher than that on the Continent, the comparison would not be so bad?

I said that it was difficult to make an exact comparison of the tax structures of individual countries. As far as Germany is concerned, until recently, at any rate, the burden of taxation on its industry was slightly higher than in this country. As to the United States, the margin, although it is in the other direction, is probably not very wide. I certainly agree with my hon. Friend that the lower the level to which taxation can be reduced, the more opportunities companies should have and take to place to reserve.

Would the right hon. Gentleman agree that since the Chancellor of the Exchequer has made a reduction in taxation, dividends have risen?

Is the hon. Gentleman aware that the "Financial Times" recently published figures showing that, on the average, companies in this country distribute nearly four times as high a proportion of their profits as do countries in Western Europe?

I saw those figures in the "Financial Times," and I thought that the hon. Member might take the particular case of Germany, which is in great contradistinction to some of the other cases put.