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TAX-DODGING IN BRITAIN.

MR. CHURCHILL'S PLÁN TO COPE WITH IT.

CRITICISM IN COMMONS. ~

SATURDAY, AUGUST 6. 19

ACROSS THE PACIFIC ALONE,

M. GERBAULT'S OYAGE.

From Thursday Island M. Ger-

M. Alain Gerbsult, who is mak- ing a voyage round the world nlond in his 40ft 10-ton cutter the Firecrest, as completed the cross- Ing of the Pacift. The Petit Proposals designed to prevent Parisien hus received news of his the evasion of Super Tax, out-arrival at Thursday Island, off the lined by Mr. Churchill in his north coast of Australia. Budget atatement and set out in Cinuse, 29 of the Finance Bill, batrit will begin the longest and gave rise to a prolonged debate loneliest part of his voyage-tho in the House of Commons when crossing of the Indian Ocean to the clause came up for conal-Mauritus, 5,544 miles of open deration on the resumption of the

sea. The only land on the course Committee Siage of the BIL

M. Gerbault has set himself will Opposition to the proposals be auch small islands as Christ- came, in the main, from the Go- mns, Cocos, or Keeling, and it is: vernments' supporters, including not his present intention to call Sir Robert Horne.

eyen at these.

The position may be stated in plain language as followa (says the Daily News, Parliamentary correspondent)

It was in 1923 that M. Gerbault! crossed the Atlantic Ocean alone in the Firecrest, and reached Long Island 142 days after leaving Cannes. In November, 1924, he resumed his voyage with the in tention of completing the circuft of the globe. He has therefore been more than two and

a half years in making his way down the

By his 1922 Budget, Sir Robert Horne brought within the ambit of special machinery for the col- lection of Super Tax, some 40 000 private companies, all of which had been registered since the beginning of the war, and con-American const from New York, formed to certain provisions.

across the Caribbean Sea, through

What Mr. Churchill now pro-the Panama Canal, and across the poses to do is to include a fur-Pacific to Thursday Island. He ther 36,000 private companies, which will leave only 5000 out- side, in order to put a stop to the practice of Super Tax dodging.

This practice is at present pos- isible if a man turns his busineas | into a private company, because he is then able to take advantage of the law which allows a com- pany Lo use its reserve funds as

now intends, after making Mauri- tius, to sail by way of the Cape, St. Helena, and Gibraltar to Mar- seilles, and hopes to complete his voyage within a year, M. Ger- bault, according to the Petit Parisien, has been completely con- quered by the beauty.

of the Pacific islands, where he found on every hand the traces of his fa-

it chooses and to distribute avourite author, Robert Louis Ste- little as it likes in the form of | dividend,`upon which alone Super

Tax is payable.

The Churchill plan is to give power to a Court of Referees to decide what is a "reasonable" amount to allocate to reserve, loans, &c., having regard to the particular type of business, when ever the number of shareholders Is less than six.

venson. It is his intention when he reaches France to have a new boat built, one smaller than the Firecrest, and then to return "and spend the rest of his days cruising in the Pacific."

that might arise would be attach- ed to the Board of Referees.

Business men, ដង represented Loss of £9,000,000 to £10,000,000. to-day in the Commons, hotly

Mr. W. Graham (Lab., Edin- criticise this plan on the ground burgh, Central) said it was ex that large reserves are often es-traordinarily difficult to say when sential for building up a business. the berder line was crossed as to The Inland Revenue authorities, what was legitimate within the they say, ought not to be permit-law and when advantage was be ted to interfere with the allocn- tion of profits. Moreover, the ing taken of the revenue. The Labour party was determined, ag sharp line drawn between com- panies with five shareholders and far as they had any influence at those with more than five-which, to stop evasion. are to retain their freedom of through evasion amounted to at allocation of reserves-is held to The present clause was not

Icast 20,000,000 to £10,000,000. be unjust. The tax-dodger, if he is to be caught at all, must be drastic for the purpose it sought caught in some way that does not to achieve. handicap industry.

Proposals Defended.

The loss

100

Sir Robert Horne said he hoped the House would realise the seriousness of Mr. Runciman's

were accepted the Bill would make speech.. Unless the amendment absolutely impossible for the

had referred.

Mr. Churchill, in justification of the proposals, which, he announc ed. the Government considered necessary to meet what he de-shipping companies to build up seribed as a dangerous and grow the fleets to which Mr. Runciman ing abuse, and which they could not postpone or withdraw, point- ed out that they conferred no new powers on the Inland Revenue authorities, but simply extended the range of powers of investiga- tier. introduced by the Finance Act of 1922, and originated by Sir Robert Horne.

The problem was the same as in 1922, and the remedy the same, but the evil having moved into a wider field, the remedy must be made to move into that field.

Some of the cases supplied him by the Inland Revenue De partment were as follows:-

to

One private company made 姦 profit of £75,000 in a year, paid dividends to the amount of only $3300, and lent" the two people in control £33,000. free of interest. A second company (textile) made a profit of £86,000, paid £6,900 in dividends, and the controlling shareholders drew £19,000 by way of interest-free loan.

Everything was struck out which enabled a shipowner to ac- quire new ships and build up a fleet. He pointed out that the common agreement, whereby banks agreed to discount bills on ship- transactions

the building undertaking that there would be a fixed limit to the division of

profits would be longer be por- sible.

Li

He begged Mr. Churchill to ap- preciate what' was involved in the clauses, declaring that those who drew them did not understand the business results of them.

1 He said it would be intolerable. if people managing business had to have their policy dietated by an outside body. He urged that the Chancellor was approaching the question of evasion in the wrong way.

said he Mr. Lloyd George, Mr. Churchill was right and cour- thought the course adopted by

agcous, and that unless some such step was taken there was a real danger of the State losing & very important branch of re-

A third company (food supply) made £9000 profit, paid out £700 dividend, and made a loan to the controlling shareholders of £6000.venue:

In all these cases the loans en- Mr. Churchill indicated amend- tirely escaped taxation at the ments he would be prepared, to spécial surtax rate.

accept in order to carry out the

It will thus be seen, observed Government's intentions with re- the Chancellor that there exists a gard to the clause. swift, sure, and easy means of avoiding taxation. That way has heen' freely advertised, and if the Government now withdraw you will give a warrant and charter from Parliament for its wide- spread adoption.

I am not ready to accept any amendment which in the slightest degree blunts the efficiency of the clause. The Government have gone to their limit.

The Chancellor contended that a no injury had been done to any business conducted for bona fide commercial purposes during the

He was prepared to eliminate the provision that the shares must be offered for public subscription, and he accepted the principle that money applied for the purchase of a business from an original owner did not of itself involve the fact that the distribution of the pro- fits was necessarily unreasonably small.

Though not exempting all old- time companies, he would insert words to respect old contracts.

In various other ways he indica- ted amendments which would en- aure that genuine reserve would

past five years, so none" could be not be touched by the provisions done in future under the clause. of the clauac,

Moreover, it did not come into operation until next year, and if in the interval better ways could be devised for achieving the pur- pose of the Government he was ready to consider them,

The Labour party challenged a division on an amendment moved by Mr. Churchill raising from five to ten per cent., the extent of the evasion permissible before an in- dividual was liable to action being taken against him. The amend- The Chancellor intimated that ment was carried by 153 to 23, the representative of the trade The discussion on the Bill was concerned in any particular case ndjourned.

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