WEAR AND TEAR ALLOWANCES
[To the Editor of THE SPECTATOR)
SIR,—In your leading article on the Budget in your issue of April 29th, you say that the Chancellor of the Exchequer "has given relief to industry by doubling the allowance for wear and tear, which, it appears, will compensate the enterprises most affected almost completely for the increase in the rate of income tax."
I should like to point out, however, that the Wear and Tear allowance is calculated as a percentage of the written down value of the plant, the rates varying from 3-2o per cent. depending upon the nature of the machinery. By the Finance Act of 1932, the allowance was increased by an additional ko per cent. of the then existing allowance. The Chancellor now proposes to increase this additional allowance to 20 Per cent. As will be seen, however, the effect is not to double the allowance for Wear and Tear: it increases the allowance by about-9 per cent. only.
Finally, the increased allowance, unless in a few very excep- tional cases, will seldom amount to such a sum as will offset the increase in the standard rate of income tax.—Yours faith-
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