A Parliamentary Perennial
By AUBREY NOAKES ' WHEN he suggested as an amendment to the Budget proposal to raise profits tax from 124 per cent. to 15 per cent. last month that 'such increase shall not apply to any organisa- tion recognised as a building society and regis- tered under the Acts relating to the building societies,' Mr. Glenvil Hall, MP, remarked that 'like the Amendment dealing with co-operative societies, which has just been disposed of, the question whether it is right and proper to impose this tax on building societies has come up almost yearly.' This is so. Roughly speaking, the Govern- ment's case is that if preferential treatment is given to building societies, why not to others? Where is such a process to end?
The classic and consistently-urged viewpoint of the building societies generally is that they are not businesses in the normal sense of the word; and that this was accepted and recognised by Government over twenty years ago, when Sir John Simon, then Chancellor of the Exchequer, de- clared they were in a class apart in respect of taxation. Or, as Mr. Glenvil Hall said, when he introduced his amendment last month: 'building societies do not make profits, and Profits Tax is a tax on profits and not on anything else. Individuals do not pay Profits Tax; only com- panies and organisations of that kind do.'
Well, there we are, confronted by two oppos- ing and apparently quite irreconcilable philoso- phies of taxation.
'The trouble with Britain today,' according to Mr. Houghton, MP, 'is that it is more profitable to invest in ice-cream than it is to invest money in the homes of the people. That is what is fundamentally wrong with society today. It has its values all awry. The Government could be using the instrument of taxation to correct the distortions which misled public opinion is bring- ing about in same of our main social purposes.' And in a similar vein the Building Societies' Gazette asks, in its July issue: 'Do the Govern- ment believe in a property-owning democracy or do they not? Is it sensible to make home owner- ship unnecessarily dear?'
But although the building societies' champions have failed once again to convince the Govern- ment that it is unfair to impose profits tax on the movement, they can take heart in the fact that they cut the Government's majority to 45 and won support from various members of all three parties. Their case was ably- introduced by Mr. Glenvil Hall this year, while Mr. Donald Wade put forward some useful proposals for a reserves distribution tax. But the Government found an unexpected ally in the Chairman of the Tem- perance Building Society. Sir, Cyril Black admitted that he would like to see some relief to building societies in respect of taxation, but added: 'We are not Members of this House as building society directors or building society investors. . . . What we are being asked to do in this Amendment is something for which there is no logical foundation.'
In short, if you are at all hazy about the arguments involved in this prolonged controversy over the building societies and their tax liability and wish to form a clear picture of the leadin$ positions on either side of the controversy you cannot do better than procure a copy of the Hansard report for June 14, where the aren' ments on both sides are set out in a convenient and readily assimilable form.
The building societies' case is that they do not make profits, do not pay dividends make 11° distribution whatever to any individual share holder or other person. They are not tradia companies in the ordinary sense of the term, and since they perform a very useful function in the State, their rates should be kept as low as Pos" sible to help the small man. The reason for the Treasury's continued and stubborn refusal t° exempt building societies, the Building Societies Gazette suggests, is simply 'their ever-present fear of making exceptions and their love ot administrative convenience.'
The building societies argue that although theY are willing to be taxed justly, they chi object to what they consider the present pedal burden which is placed upon them. Writing in the Building Societies' Gazette for June Sir Bruce Wycherley says that as a result of the Budge' proposals building societies will have to 11°Y away more of their surplus in taxation than did will place in reserve. But this consideration does not unduly alarm Sir Cyril Black, who, 'using words in their ordinary sense,' stated in the debate, that 'building societies earn a sum ova and above their outgoings, including the interest paid to the depositors and their shareholders, and that surplus is profit on which profits tax i5 levied. If it could be. established that the profit of a building society was not the kind of prOl which ought to bear profits tax, that argunwril could equally well be advanced to urge that the surplus ought not to bear income tax.'
.Doubtless the echoes of these familiar atglii ments, for and against, will be heard again ne% year . . . but there is discernible, nevertheless, a certain air of triumph and satisfaction in the building society world just now. This seems ta me to be delightfully reflected in the norrnallY discreet and sober Building Societies' GazeI4'; which addresses its readers thus on the first Pa° of the July issue: It is not often that the building soeieg movement causes a Government to tren1ble,7, m 5 but it did this month. To cut the Governell'vi majority to 45 and to cause prominent Consf tive back-benchers either to vote against own Chancellor of the Exchequer or deltbrill ately to abstain is to win glory, and respect, defeat. . . .
The first known building society in the `orlij, was founded, in or before 1775, by Richard 1Ce t ley, the proprietor of the Golden Cross Inn, Birmingham, and most of the early societies o'er formed on quite casual, informal lines, by snial ca' groups of working men, assisted often by 1° lawyers and clergymen. Little could such pionee.' have guessed that in later times building 50cietie5 would prove the subject of prolonged and onto; plex parliamentary discussion every year ab° this lime.
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