ENTER A.P.D.
My first reaction to the new Armaments Profits Duty proposals is that the Treasury has made the best of an inherently difficult job. If one accepts that it is politically and morally necessary that armaments profits should be specifically taxed, then I imagine one will agree that the general framework of this plan is reasonable. The drafters have contrived to avoid the more glaring blunders of the original N.D.C., and although there will inevitably be in- justices, there should be a modest contribution to the Exchequer from a source which most people fed is fair game for the tax-collector. Having said that, T must record my view that the actual administration of this tax is going to be difficult, so difficult, in fact, that apart from political considerations, I doubt whether A.P.D. would be really worth the candle.
Not only will it be necessary to calculate armament and civil turnover for each undertaking, but there will be all the troubles inherent in assessing costs of new assets and " capital " employed, in defining the position of holding companies, and so forth. In short, the Government' has provided yet another harvest for the accountancy profession, which is already overworked in directions in which it is less usefully employed than it should be. As for the implications for armament shareholders, it is obviously impossible to estimate the incidence of A.P.D. on individual companies since one does not know how much armament work they are doing. My own feeling is that this extra burden will not be very heavy in relation to the companies' total profits, although it will obviously affect highly-geared equities more than low-geared. The market has registered its first thoughts on A.P.D. by lowering prices of shares such as Fairey Aviation, John Brown and Handley Page by anything from 6d. to is. 6d. After the steep falls in this type of share in recent months this seems to me an adequate pre- caution. * *
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