THE EXCESS PROFIT TAX.
[To THE Eorros or vat .8evoraves."1 Sis,—Knowing your ability in all economic questions, I venture to ask a little space for the ventilation of views upon the im- portant matter of the Excess Profit Tax. I am a chemical manu- facturer, very fond of experimenting, and full of enthusiasm awl invention, and am constantly rending chemical journals, and think- ing of new manufactures. which would extend my businesa. In urging these views upon one of my co-directors he said to me :— " Don't trouble yourself. Just do sufficient work to keep our present businees together. We will get no adequate reward for extending. For example, suppose we expend £5,000 in plant to make the articles which you speak of, and that they yield us a profit of £1,000 a year, what would we „got? The increase in market prices has already given us the £200 allowed over 1911 profits. so any further -profit must bear the whole of the 80 per cent. tea. We would, therefore, have to pay in tax .0809 plus Ss. per pound on the remaining £000, color our outlay of £5,000 we should have only a return of £150, without writing off anything for depreciation. Were we to attempt any adequate writing off for this purpose, we know that the Commissioners would object, as they have naturally no experience of the waste of chemical plant. There is no Government policy of protection, 60 a few years after peace is declared the German competition will likely largely reduce such profit as Ave may now hope for, and we shall be left with all our previous profits in the Government's hands, and an unre- munerative plant on our own hands."
I saw the force of his arguments. The sinews of enterprise have been cut, and instead ef trying to extend I am now settling down in leisurely inactivity and spending time in gardening and literature. Thus the Government by asking too much have lost all. Had they been content with 50 per cent. we might have ventured, and they would thus have received £500 a year from us; now they get nothing. I understand that the German chemical manufacturer- .are allowed to heap up capital, so aa afterwards to be in a position to compete with the world. Our Government, on the contrary, is preventing the accumulation of capital, and thereby choking all enterprise and extension. Mr. Boner Law before he went into political life was an iron merchant, and simply bought aud sold. and did not require to sink any money in plant, and I think that he has in consequence, failed to consider the question from the manufacturer's point of view. To those doing a merchant's bust. nets with a large annual turnover a residuum of 15 per cent. of the net profits may not be unsatisfactory, but I think that every chemical manufacturer will consider it wholly insufficient to justify him in running the risk of putting down plant. I fear that this excessive tax will entirely stop chemical progress in this country, and thus kill for the Government the goose which might have laid for them a good many golden eggs—I am. Sir, de..
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