I move as an unopposed motion, and pursuant to notice—

I move—

I am asking very little, but what I am asking is of vital importance to our young industries. I could have made this motion much more comprehensive, and the motion could have read, for example, that the Government is asked to abolish the entire excess profits tax. It would have been more popular, more popular apparently than this limited motion. But I was afraid that if we made it so comprehensive we might defeat our own purpose. But since we have restricted the scope of the motion, I hope that we shall be able to get the desired results. In any case, I notice on page 60 of the Order Paper that notice has been given of the motion by my colleague the hon. member for Heilbron (Mr. Liebenberg) with regard to the excess profits tax as it affects the farmers. He moves—

Here again is a restriction which the hon. member wants to move, and I hope that he will be just as successful as we hope to be today with this motion, which I am trying to justify. This motion is of the utmost importance, and it affects the excess profits tax. Everyone who is acquainted with the needs of the people knows that the excess profits tax is a very unpopular tax, not only because it takes so many millions of pounds out of the pocket of the nation—that is the first reason why it is so unpopular, because everyone knows that when we engage in a war, rightly or wrongly, millions are required to be spent as a result of that ill-advised war resolution. A hundred million pounds may be required this year for the war, and all this money will have to be paid later on. We know, therefore, that taxes must be levied. But the argument against this special excess profits tax is that practice has shown that this excess profits tax promotes over-capitalisation. The reason for that is this, that in the excess profits tax an interest, a dividend, of no more than 8 per cent. is granted to our industries, while everything exceeding that is taxed at the rate of 13s. 4d. quite apart from the further 6s. 8d. which is also taxed, so that practically nothing remains. But this 8 per cent. is a gracious concession on the part of the Minister. The point is that when your capital is small, 8 per cent. is allowed, but when your capital is big, it remains at 8 per cent., provided you make the necessary profit. The result is therefore a tendency to overcapitalise as a result of this taxation, and in consequence our industries have been rendered a very poor service. But in addition to that the excess profits tax promotes a squandering of revenue. Everyone tries—it is only a natural tendency—to pay as little taxation as possible to the Government. I am afraid that even my friends on the other side, no matter how enthusiastic they are about the war, will try to avoid this tax with the same zeal as this side of the House will try to do so. The result is that a great deal of money is spent on all sorts of things which are practically unnecessary, and on which money would not have been spent otherwise. But as a result of this unwise excess profits tax, the money is just spent. People prefer to waste it in some pleasant manner or other, rather than pay it into the unpleasant coffers of the State. Another consequence is that under this tax big capital enjoys indirect protection. I want to explain this at greater length. The bigger the capital, the more favourable the position of an industry in so far as the excess profits tax is concerned. Big capital is in this favourable position, and we must not forget that to a large extent big capital represents overseas capital. In other words, overseas big capital enjoys indirect protection in comparison with the smaller capital of the country itself, that capital which is built up and expended with care by the industrialists of this country. It discourages initiative. The hon. Minister and all of us know that one need only go about the country to find people who have been discouraged by the excess profits tax to invest money in industries. The hon. Minister of Finance will remember that during the previous Session I introduced a motion in connection with industries, and how I quoted official figures in order to prove that since the excess profits tax has come into force, our industries have not progressed, but retrogressed certainly in so far as numerical strength is concerned. The Minister did not deny the official figures, but he came forward with statements from newspapers and other data in an effort to prove that I was wrong. I still maintain, however, that the official figures clearly show what I maintain, namely, that as a result of the excess profits tax our industries have retrogressed and not progressed. I challenge anyone who has a practical knowledge of the position, to show where new industries have come into existence recently, industries which promote the building up of the country. I do not want to say that no war industries have come into existence here and there, but I mean industries which have a future, and which will or can be of a permanent character. The new industries therefore suffer to-day; they are smothered as the result of the excess profits tax. What I am saying here is not only my opinion, but it is also the experience of other countries. The hon. member for Kensington (Mr, Blackwell) informed us during the pervious Session that excess profits tax had been abolished in Australia. He had just returned from a visit to Australia, where he had seen what was taking place, and he returned, as I understood him, with an official message from the Government that they were abandoning the excess profits tax, because it was too drastic, and did not have a good effect. America was clever enough not to introduce an excess profits tax at all. They say “No, it wastes capital, it is a wastage of brain power and energy.” They want nothing to do with it. In England, the third country which I want to mention, the excess profits tax is also very unpopular, and they were compelled to ease the pressure of the tax in certain cases. If therefore we say that we want nothing to do with excess profits tax, then it is not merely a voice crying out in the wilderness, but one finds this position that in many other countries which have much more experience than we have in the industrial sphere, and which are much more advanced than we are in this respect—one finds that the same opinion is held not only by industrial people but also by the governments themselves, who say that the excess profits tax is an evil. But I want to give a few quotations to show how more and more the opinion has come into being in Government circles that we should get rid of this difficulty. I have before me a speech which was made by the chairman of the Anglo Transvaal Consolidated Industrial Company Limited, and the speech was made by Mr. A. S. Hersov, who is a well known and leadingindustrialist. In his speech at the last general meeting he said the following in regard to the excess profits tax, something which in my opinion confirms what I said here, and which supports my opinion. Talking about base metals, he said—

And then he goes on to say that this tax cannot possibly be applied to the industries because it will ruin them. He goes on to say—

Those are precisely the same arguments and conclusions which I have drawn, and the Minister ought to pay careful attention to them. But now I come nearer home. That was a speech by Mr. Hersov, but here I have a very interesting article in the well-known industrial magazine, the “Mining and Industrial Magazine of South Africa.” Therein appears an article entitled “South Africa’s Taxation Muddle.” It is an article by a “well-known member of Parliament.” I should like to quote a passage from that. I am certain that that “well-known member of Parliament” is not a member on this side of the House, because then he would have published his name. But he does not want to give his name, and I am therefore convinced that this “well-known member of Parliament,” who wants to remain anonymous, is not seated very far from the Minister of Finance. I do not want to guess where he is sitting, or who he is, but we are undoubtedly dealing here with an expert exposition by a member who sits on the Government side. He dealt with the subject exhaustively, but his conclusions especially are interesting. I do not want to quote the whole article, but he states this with reference to the excess profits tax [re-translation ]—

And his concluding sentence is particularly interesting:

This well-known member of Parliament says interesting things with which we can agree. He says, inter alia, that new industries must be given a chance to become strong, so as to be able to face the struggle which lies ahead. Now I come nearer to the provisions of my motion, which specifically asks for something in connection with the new industries. The motion asks that a sufficient portion of the profits of young industrial undertakings be exempted from the excess profits duty to enable them to accumulate reserve funds for the renewal and improvement of machinery. The Minister will notice that I have summarised the matter as much as possible in order to draw the attention of the House to one particular point especially, because this is a most important point. What is the position of our young industries at the moment? The position is that they must struggle, not so much to maintain their position at the moment, but so as to ensure their future. That is the big difficulty. The future of the young industries is undoubtedly in the greatest of danger at the moment; a danger which exists also as a result of the weak attitude of our Government—their weak attitude in so far as our interests in other parts of Africa are concerned, and in so far as those industries are concerned which we thought would be built up as the result of the sacrifices of our men up North. The danger is great, and in order to be able to avoid those dangers and carry on with the building up of our industries, three things are undoubtedly required urgently. The first is assistance with a view to technically perfecting our industries, which must be built up, a goal which we must strive for as much as possible. It sometimes takes months and years to perfect and to bring the service of young industries nearer the point where it should be. Whenever we want to propagate industries in South Africa, we are always faced with new problems, problems which we do not find in other countries, which cause difficulties here and which may cause the ruination of industries. Those technical difficulties can only be solved at the cost of time, energy and money. Those difficulties must be solved. Then there is the question of machinery. We know that as a result of the increasing war pressure and the requirements of the war, demands are made upon our industries—also because there is not sufficient opportunity for the development of new industries—demands which require our young industries to work day and night. Their machinery is always working, and in many cases, in the majority of cases, they work 24 hours out of 24. The result of this is that after the expiration of a short time, the machinery is worn out and must be renewed. It wears out and depreciates sooner than would be the case in normal circumstances. I pointed this out last year already, but the Minister of Finance says that this money belongs to him. It may have taken these young companies four or five years to reach the dividend stage. Now they may pay out 8 per cent., and if we spread it out over four or five years, then it is not even 2 per cent. That they can get, but of the other monies, he takes 13s. 4d. in the £ and also other taxes in addition to this excess profits tax. How can he expect those companies to be in a position to buy new machinery? The industry must then go and borrow money at the bank to improve and to maintain its machinery. The position is that that borrowed money is reckoned for the purposes of this tax as capital, which is again a blow, and a threat to the continued existence of such industries. The third requirement which is necessary for the development of industries is that an eye should be kept on the export side. It is in that respect especially that I blame the Government. On a later occasion I shall try to explain all those points in greater detail, how scandalous the position is, and consequently the scandalous neglect of opportunities on the part of the present Government to expand our export. I do not want to go into that now, because I am only dealing with certain aspects of this motion. But I do want to quote something which appeared in the “Cape Argus” recently. Last Saturday evening the “Cape Argus” wrote this in connection with this point [re-translation]—

This is a statement, not by the Opposition, but by a newspaper which not only supports the Government through thick and thin, but much more than that, a newspaper which leads the Government. That is the statement, and I hope that the opinion expressed by this newspaper, will also guide the Government in the days which lie ahead, and which we must certainly expect in the industrial sphere. These points, namely, the improvement and the perfection of the technical side of our industries, the improvement and maintenance and expansion of machinery, and in addition to that the expansion of our exports, those three points undoubtedly represent the tripod on which every new industry of the country stands to-day, and as I have explained, as a result of this tax, those matters have been made practically impossible for our industries. It becomes impossible to earn the capital which may be put into the industries. Here and there small concessions are made, of course. The Minister has his committee. It may be very handsome to make concessions, but I am not pleading for concessions based on mercy; I plead for the rights of new industries. There are small concessions, and that is all. It is impossible to expect a future on that basis. It is impossible to attain by that means what is suggested as being essential. The report which came into our hands today—it is Report No. 1 of the Social and Economic Planning Board which lies in our boxes today—tells us that it is anticipated that when the war is over there will be 230,000 people in South Africa who will have to obtain employment. There will be 230,000 unemployed, and the plans which have been made hitherto by the Civilian Re-employment Board will make provision for only 1,500 out of this 230,000. What is going to happen to the other 215,000, if we continue with this killing tax which rests on our industries? What does this report say about it? I refer you to paragraph 50, in which the Planning Board says—

Industrial development is of the greatest importance! And now I ask the Government to fulfil its obligations in respect of this industrial development. We have already developed industries in our country, and in that connection I should like to quote what Dr. H. J. van der Byl said in his annual report of the Industrial Development Corporation. He states this—

Here we have the utterance of a wise man and a great industrialist, a man who showed in the past that he knows what he wants, and that he does whatever he can for the country in the industrial sphere. I want to contrast his opinion with a statement on the part of the hon. Minister of Finance during the last Session of Parliament. He made this statement, which is in direct contrast to the words of Dr. Van der Byl. During the previous Session the Minister said this in connection with his taxation proposals—

And now we come to this reprehensible phrase which the Minister used—

Dislocation of industry and trade! I quote these words which came from the Minister’s own mouth, and that is my whole argument. We are up against the fact that the Minister does not mind dislocating industries nor even suppressing young industries, as long as it will serve the purpose of giving rein to the war psychosis from which he suffers. We are faced here with a very serious problem. You will notice that I have kept this matter outside party politics. It is not a question of party, but a question of life and future, a question of our daily bread; and I want to make an appeal to Parliament with all due deference because I know that there are many members behind the Minister who are better acquainted with these matters than I shall ever be. I know that those experts will agree with every word I have said here. If things continue in this way, then our young industries will not go ahead, and we shall not get the development which we ought to get, but they will be dislocated, and eventually that dislocation will lead to their destruction.

I desire to second this motion of the hon. member’s, and I want to put a plea not only on behalf of young industries but particularly on behalf of permanent industries which will still be there after the war. Many industries spring up during war time, but disappear again afterwards. The hon. member for Pretoria District (Mr. Oost) said that Industrial concerns had to go to the banks to borrow money to buy machinery and so on. But it goes much further than that. They go to the banks to borrow money to enable them to pay the excess profits tax because profits are shown in their books and they have not got the money to pay the tax. They have to borrow money to pay the tax to the Minister. The Industries which have been in existence for a long time are able to disguise some of their profits. They pay higher dividends, they establish small companies and so on, and before they pay their tax, they have managed to disguise half of their profits which the small industries which were only established a few years ago cannot do. For that reason I want to second the proposal of the hon. member.

I have listened with some interest to the eloquent and somewhat immoderately phrased speech by my hon. fiend the member for Pretoria, District (Mr. Oost), and I may say I have sympathy with the motive which prompted him to move this motion. His motion, however, Mr. Speaker, as it stands on the Order Paper, deals with only one thing, namely, the impact of the excess profits duty on young industries. I think it would be better if the House had an opportunity this afternoon of discussing a much wider question, namely, the whole war time taxation measures of the present Government. That obviously cannot be done under the motion as it stands, and I therefore propose to move as an amendment to my hon. friend’s motion, the following—

I hope my hon. friend will see his way clear to accept that amendment to his motion.

Do you really believe it?

While I move that comprehensive amendment to my hon. friend’s motion, I wish to confine myself mainly to the Excess Profits Duty Act. I want to test that, Sir, in the light of one of the canons of taxation which were laid down by nobody less than the Minister himself when he introduced his first war time budget. He then, I think, laid down three canons of taxation which he indicated to the House he was going to follow in his taxation policy. I am not concerned with the other two, but only with the one which was equality of sacrifice. In my submission, if this particular measure is judged by that particular canon of taxation, then it fails and fails fundamentally.

Before the hon. member proceeds I wish to draw attention to a ruling given by Mr. Speaker on the 25th October, 1927, when, on a motion to exempt farmers and farming operations from payment of income tax, Mr. Speaker disallowed several amendments to extend the scope of the motion to other persons and groups of persons. In the present instance the motion is confined to the exemption from excess profits duty of young industrial undertakings and the amendment proposes to extend the scope of the motion to an enquiry into the working of the whole of the war-time taxation measures. I regret that I shall therefore be unable to put the proposed amendment to the House or to allow the discussion which such an amendment would involve.

Well, Mr. Speaker, it is unfortunate that I am ruled out of order. I note there is some jubilation about it on the opposite benches.

You need not worry about us

[inaudible].

That is the sort of thing we expect from the opposite benches.

You are only concerned about money for the war.

I am not going to allow an irrelevant interjection like that to deflect me from a discussion of the excess profits tax, in so far as it affects young industries. I think I cannot do better than to quote to the House a condemnation which was made by the American Secretary to the Treasury in 1919 on the American Excess Profits Duty, which was in existence in America during the last war. What he said then was this—

Now, sir, although Mr. Glass spoke of the excess profits duty which was in force in America during the last war, my submission to this House is that every word of condemnation that fell from him in that statement is applicable with equal force to the Excess Profits Duty Act which is enforced in this country at the present time, and I propose to give chapter and verse to show that that is so. I shall take the various points made by Mr. Glass and give the facts as they exist in this country. The first point he makes is that it encourages wasteful expenditure. Well, sir, the position is that a great many examples of this can be given. This matter has been very well put up in an article which appeared in the December issue of the South African Journal of Economics, where the following statement is made, on page 277—

That inflationist tendency is in evidence in many business concerns in industry today. The article goes on—

The next point I want to illustrate is the one described in the words of Mr. Glass, “The excess profits duty puts a premium on over-capitalisation, and a penalty on brains, energy and enterprise; it discourages new ventures, and confirms old ventures in their monopoly.” That comes about from the fact that an arbitrary standard is laid down for new businesses, namely 8 per cent. return on the capital employed in the trade plus an allowance of £250. It is therefore easily appreciated that where you get a concern with a small amount of capital in it, but a large amount of initative, brains, enterprise, energy and hard work, its return would be heavily taxed, because it only gets 8 per cent. on the capital employed. In other words, there is a strong penalty on energy, enterprise, brains and hard work. Contrast that with a company with a very much larger capital, less skill, less energy, less brains, and less hard work; such a company would be very much better off. I want to point out that many of our large and well-established secondary industries which are a strong support to the economic structure of the country to-day, have started as small concerns, probably one man and, not owing to large capitalisation but to a large amount of enterprise and energy which have been put in, have built up profits which have been put back into the business, and today are large and flourishing concerns. I think examples of this are mainly the clothing and furniture industries, the boot and shoe manufacturing industry, and certainly many engineering works have started in that way. I know, for instance, that one of the biggest engineering firms on the Rand is such an example, I mean the East Rand Engineering Company, which is doing work of the greatest magnitude as far as the war effort is concerned, and that company started in just such a small way. Today it is quite impossible for a small industry to start in that way, and to put any profits back into the business and get established as an industry which can give employment to South Africans and assist the war effort to the extent that this particular firm has done. I want to give another example, I want to contrast the position of a shrewd business man who makes shrewd purchases and buys the assets which he employs in his business at a very good price with the position of a man not so efficient, not so shrewd and far-seeing, and pays far too much for the assets that he employs in his business. That man will be far better off than the shrewd and efficient man who has been able to pay less because he gets 8 per cent. on the actual amount that he has spent, the actual amount of capital employed in his trade or business. The position therefore is that this arbitrary standard of 8 per cent. allows no scope whatever for risk taken; it allows no scope in industries where there is any risk to be taken, and, sir, I am not an industrialist as my hon. friend over there is, but I know of no industries which have been built up in this country where there was not some risk to be taken, and you can see what attitude a person would take up before he starts building up an industry. He would say to himself: “The most I can get out of this industry is 8 per cent. on the capital I put into it.” He will also say to himself: “I can get 6 per cent. for my money without taking any risk. I can put my money on mortgage at 5½ per cent. to 6 per cent. and comparatively speaking I would run no risk.”

Where can you get 6 per cent. interest?

I shall make my hon. friend a present of ½ per cent. and call it 5½ per cent. Take it at 5 per cent. even. It comes to this, that the industrialist will say to himself: “Why should I, for the sake of the extra 2 per cent. or 3 per cent. risk the chance of losing the whole of my capital? I would rather put my money out on first mortgage, get 5 per cent. and be certain of saving my capital.”

The percentage on mortgages will still come down to ½ per cent.

What I have just stated has been confirmed by the leading authority on industries in this country, namely, Dr. H. J. van der Byl, to whom my hon. friend over there made reference. Dr. van der Byl stated in the annual address he delivered to the National Industrial Development Corporation that many young industries were examined by the technical experts of that Corporation, and as a matter of fact the Corporation was prepared to put its money into several concerns but when the promoters learned the implications of the excess profits duty, they were not prepared to risk their capital for the sake of the extra 3 per cent. return. And I say that in these times when there is an opportunity for the establishment of many new industries, it is a most unfortunate state of affairs that it should be as Dr. van der Byl has indicated. This House, some years ago, passed an Act which set up the National Industries Development Corporation, and that Act gave this Corporation a capital of £5,000,000. The idea was, as has been shown in the last war, that while there is a war on, there is an opportunity for getting new industries established in the country. The idea was that this Corporation would act as an industrial bank and assist in the establishment of young industries in the country. But whilst the Government on the one hand, through the Minister of Commerce, has come along and set up that machinery and provided that capital for the stimulation of industries in this country, the Government has, on the other hand, through the Minister of Finance, come along and frustrated and nullified to a very large extent the establishment of these young industries. And it does not even stop there. It does not only prejudice the position of the establishment of young industries. It is even hitting the established concerns, especially engineering industries, to a very large extent in this country. I do not have to dilate on that to any great extent. A memorandum was put up by the Federation of the Iron and Steel Industries to the hon. Minister, and they make the point that in view of this taxation which is so heavy, it is quite impossible for them to go in for any programme of expansion, as they are not allowed to plough back their profits into building up the industry, and they point out that it prejudices their ability to assist the Government in any post-war reconstruction which will have to take place. They also make another point, which is an anomaly under the existing Excess Profits Duty Act, that is to say that there is no provision made for succession. In other words, if two smallish engineering firms were to amalgamate, they lose whatever pre-war standard they had. It is a very unsound thing industrially that that should be the case, because I am told that such an amalgamation, especially in the engineering industry, results in the development of the industry on sound and economic lines. I have dealt with the establishment, or rather with the difficulty of establishing, new secondary industries. I want to say a word about the effect which this taxation measure has had on the exploitation and development of our base metal industry. Last year I was a member of a Select Committee which had before it the consideration of a new Base Metal Bill. That Select Committee heard evidence from witnesses from all over the country, and eventually there was passed through this House a Base Metals Act which set up machinery for the development of our Base Metal industry. Here again, as in the case of secondary industries, there was a heaven-sent opportunity owing to the war, which had brought about a great increase in the price of base metals, and a ready market for the sale of base metals. Here again was a wonderful opportunity to get our base metals developed. Once again, although the Mines Department had been alive to the position and had taken steps to have this Bill prepared and passed by Parliament, the Excess Profits Duty has come along and nullified to a very large extent the development of our base metal industry. May I give a further striking illustration of this. Some time ago a company was formed in order to go in for the mining of mercury. We had never previously mined for mercury in this country. A company was formed with a small capital of £90, and it acquired 277 base metal claims.

That happens to be a bad case.

The hon. Minister says that this happens to be a bad case. It is a bad case from the point of view of the Minister of Finance. I am sure that according to the hon. the Minister of Mines it happens to be a particularly unfortunate case as far as the development of our base metal industry is concerned. However, I will put the facts before the House, and it will be for the House to judge, after no doubt hearing the Minister of Finance as well on the matter, how good or how bad the case is, purely from the point of view of the interests of the country. I am not concerned so much with the people who promoted the company—except that it promotes the public interest in the development of the base metal industry. As I have said, the company acquired 277 base metal claims, and they were valued at £5 each by the Receiver of Revenue, that is to say, their capital employed in trade was assessed for taxation purposes at £1,375. At that time the claims had not yet been fully prospected, and their true value was ascertained shortly afterwards, and according to experts those claims are worth in the neighbourhood of £80,000. The Receiver of Revenue is not allowing more than £1,375 as the capital employed in trade. Now, although the capital of the company was only £90, they have nad to borrow in order to bring the company to a profit-earning stage. They have had to borrow a sum of £30,000.

Fine.

With regard to my hon. friend who says “Fine”, I would like him to realise that the company has got into indebtedness to the extent of £30,000. But as soon as it makes a profit of £370 it has to pay an excess profit of 2s. 3d. to the Government on everything it makes in excess of that amount. I do not know how my hon. friend would like to carry on farming under those circumstances. The Minister said that this is a bad case. The Revenue authorities—I do not accuse him as the Ministerial head of the Revenue authorities—but it is proverbial that the Revenue authorities do not suffer from any soft-heartedness, but even the president of the Income Tax Court which decided this matter went out of his way to make the following statement. He said this:

I do not know how this can be such a bad case from the point of view of illustrating the point I wanted to make. The Court felt that an adverse decision in that case would militate very greatly against the success of the appellant. The learned Judge said:

That is why I appeal to my hon. friend the Minister of Finance to amend the Excess Profits Duty Act in such a way that relief will be given so that our Base Metal industry can be developed and our secondary industries developed and expanded to a proper extent. The Judge concluded by saying:

Now what has happened in the case of that particular mining company, I understand, has happened in many other cases. I am certain that if my hon. friend the Minister of Mines were here he would not be able to contradict the statement I make here, namely, that there would have been many other successful mining companies established in order to exploit our Base Metal Industry to the full, had it not been for the provisions of the Excess Profits Duty Act, in this country, and I say that the Minister ought to take steps to overhaul our legislation in so far as this taxation is concerned, to such an extent that these anomolies and checks on healthy economic development are removed, so that the country as a whole can benefit.

What are you waiting for?

I am giving my hon. friend an opportunity to allow my point to sink in. One of the other anomolies of the Excess Profits Duty is that it applies the tax to professional fees. Now, Sir, it is a well-known fact—I think it is a fact known to everybody—that in no other country in the British Commonwealth of Nations is there a tax on professional fees. South Africa, however, during this war, has seen fit to impose such a tax. Even in the last war when we had the Excess Profit Duty, the professions were specifically exempted, and in England today and in the other Dominions there is no such tax on professional fees. In this country we have a tax on professional fees, whilst we have no tax on salaries.

Why did you insist on calling it professional fees in the first instance?

My hon. friend does not realise that it is not what you call a thing; it is what it is in substance and fact. I want to say in conclusion—and may I say that in view of the fact that you have ruled out of order the amendment I was going to propose—may I be permitted to move the following as an amendment to my hon. friend’s motion:—

That is all anomaly.

I stated in this House during the last Session that if we are to carry out the steps that it will be necessary to carry out in order to have the better new world that our soldiers are fighting for, taxation will necessarily have to be as high, even after the war as ever. I hope however, that we will not have excess profits duties, but in other respects taxation will be high, and that is why I included that provision at the end of this amendment.

You mean you should take more from some and less from others?

Yes, I say that the large bulk of the responsible section of this country do not want any remission of taxation. What pinches them is not the amount they have to pay. What pinches and hurts is that one man with a certain income pays one tax, while another man with the same income pays half that tax. This has caused a great deal of ill-feeling, even amongst the Minister’s own friends, and that is where I suggest an overhaul should take place and the position be put right. I want to make a brief reference to an article which appeared in the “Cape Times” and which was reproduced in the “Mining and Industrial Magazine.” There it is stated:—

I think that statement does the hon. Minister some injustice. Whilst I made criticisms of his taxation policy, I want to speak with every fairness as far as he is concerned. Certain of these anomalies, have, I think, been evened out. The Minister has realised that there were anomalies, and the has set up machinery which has had the effect of evening them out, and I hope the hon. Minister will not lend a deaf ear to what was said here this afternoon, but that he will take further steps to see that our taxation measures get a thorough overhaul, with a view to removing those inequalities and with a view to removing the feeling of disquiet in the country and the feeling of soreness that there is this lack of equality between one taxpayer and another taxpayer. In other words, I ask the hon. Minister to act up to the full of the canon of taxation that he himself laid down at the beginning of his Ministerial career, viz. that there should be equality of sacrifice.

In seconding this amendment, I would say that I am sorry that the broader aspect of the case has been ruled out of order today, because it would have been very interesting to hear the House on the general subject of taxation, instead of the House being confined to discussing merely one aspect of what has become, in South Africa, a very difficult matter; but we accept your ruling, Sir, and we shall confine ourselves to the Excess Profits Tax in relation to its effect on new enterprise. The Excess Profits Tax is something that is not new to this world. It was known in the last war, and when it was introduced in this war, we felt that the experience of the last war should be brought to bear. But, I feel it was unfortunate that when the Minister introduced this tax in 1940, it was introduced in a very circumscribed way, and many provisions were omitted from the tax at the time. We suffered an unfortunate loss of time then, but the following year a few amendments were given effect to by the hon. Minister, amendments such as that enabling parent and subsidiary companies to be assessed as one tax entity instead of being taxed as individual entities. Amendments were introduced in 1941, and these amendments went a long way towards improving the Act as it then stood, but there are still further anomalies which are bearing hardly on new enterprise. The effect of these anomalies is to retard development in this country, and I feel that in the field of new enterprise, development has been seriously handicapped. There has been great industrial expansion, arising out of the war, but I feel that that expansion has arisen from war needs only. It is expansion which will be of a temporary nature, and when the war clouds blow over many of these industries will cease to function. They will then have to come back to peace conditions, and we will find rather a shrinkage in industrial output. The Minister, talking at some meeting in the middle of last year, made the statement that, as evidence of the increase in industrial output, power consumption had increased by 19 per cent. I feel that if those figures are analysed, it will be found that a very large percentage of the 19 per cent. would be represented by an increase in the power consumption of the mines. A certain percentage must obviously be represented by an increase in the power consumed in railway traction, and I think that if these two items are deducted from the figure of 19 per cent., we may find that the actual increase in power output in industries is as low as 2 per cent. In the field of base metal enterprise, there has been very little expansion indeed, and as one, who lives on the Rand, as one in the midst of mining, I am quite cognisant of the very serious effect, which the Excess Profits Tax is having on mining enterprise. The hon. member for Germiston, South (Mr. J. G. N. Strauss), who proposed this amendment, referred to the Mercury Mine. I would like to elaborate on that instance a little further to show some of the difficulties that anybody is up against, who tries to sponsor a new industry, especially a new mining industry. He has given the House figures of the capital and told you that a loan of £30,000 had been made by the Government. Now this is the problem, which faces the owners of the Mercury Mine. They have to repay £30,000 by way of a percentage on the production. They have by the expenditure of the £30,000 been able to increase their output, and they have in consequence increased their profit. Just let me say in parenthesis that before the war mercury was selling at £16 a bottle and is now sells at about £70 a bottle. This industry is one day going to be faced with the inevitable fact that the price, which is now obtained for mercury, must decline, and that industry is then going to find itself in a very perilous position, if mercury declines to the pre-war price of £15 or £16 a bottle. That industry will have to fortify itself against that day, but it now finds that it is called upon to pay a certain amount in reduction of the loan and that its profit is being taxed very heavily indeed, quite out of proportion to the tax generally experienced by small country mines, which should not be subject to excess profits tax in this severe manner. It is no exaggeration to say that this young and struggling company will probably pay in tax between 16s. and 17s. in the pound on its total profit. It is no exaggeration to say that, and the shareholders in this company now find themselves in this extraordinary position—by the time they have paid the Government on loan and tax they will have to put money into the company in order to carry it on. It is an absurd position to find oneself in, when one is producing something which is so vitally required at the present time as mercury. That is one illustration. Then there are other companies, particularly engineering firms, who are faced with very heavy depreciation, who are running their machinery not eight hours a day but 24 hours a day, and under such conditions the depreciation is far heavier than it is otherwise. They are faced with improving their plants. The machinery that they purchase at the present time is of necessity purchased at prices which are not normal prices, and the excess that they are paying for that machinery under present conditions will one day have to be borne by them, and they can only bear it out of profits. A friend of mine in Johannesburg came to me the other day and said that he had a small engineering works which had made £5,000 profit. He then found that his excess profits tax was £4,000. That left him with £1,000 to carry out any programme of expansion. I have another instance, and I quote this instance so that one can get a practical idea of what the effect of the tax is. Another company struggled for a few years, making losses. It is inevitable that for the first year or two a loss is made, and if it is a big organisation it is quite conceivable that the first profits will not be made for six or seven years. This company got onto its feet last year and made a profit of £30,000, and it began to think that it could recover something of its previous losses, but when the tax assessment arrived it found that the Receiver of Revenue wanted £25,000, so the shareholders did not even have enough money left to recompense them for the losses of the previous years. It is extraordinary that the company was allowed only £5,000, but an individual employee of the company was able to make £4,500. A salesman was able to earn £4,500, but the shareholders, who at that stage were suffering from the severe losses of previous years, could only make £5,000 nett. This problem arises largely because of the anomalies which still exist, and one of the worst anomalies is the method of computing the basic profit for the excess profits tax. In computing the basic profit no allowance is made whatever for losses in previous years. In the computation for normal and super-tax, the losses of previous years are allowed, but for the purpose of the excess profits tax, previous years’ losses are not allowed, and that is the reason for the high taxation in the case I have just cited. This company made £30,000 profit, but has had no relief for the losses made last year and the years before that. Now, as I said earlier, it is unavoidable that a company in its initial stages, particularly during the first year or two, should make losses. I cannot see how it is possible to start a new company without making a loss for a year or two, and it simply means that when a profit is ultimately made the excess profits tax is levied with severity, so that the nett profit available after paying taxation is not sufficient to cover the losses which have been made in previous years. The taking of risks under such conditions is something which, I submit, is not reasonable. There is no question about the willingness of people to pay taxation—none whatever. I have come into contact with a very large number of people in industry on the Witwatersrand, and in not one single instance have I heard any demur at the severity of the taxation; but there is a very strong and growing grievance against he inequity of the taxation measures, and I want to read a letter which arrived here a day or two ago after the Session had commenced, a letter which was addressed to me. I am not going to read the whole of this letter; I shall just quote certain paragraphs. The writer of this letter says:

My friend then goes on to deal with another problem which we find under the present Act, and in explanation before I read this part of the letter, it is the problem that the Commissioner, through the Receiver of Revenue, has the right to determine, what you should pay your manager, what should be paid for managerial expenses, and people are questioning the qualifications of the Receiver of Revenue to assess the value of a man’s services, who is a manger in a business. Now my friend goes on—

I may say that this man runs an engineering works. £850 is approximately £16 per week, and I can say this, that on the Rand today there are many workmen, who are receiving £16 a week. And here the Receiver of Revenue assesses the value of this man’s services at the equivalent of what a workman would get—and I can say further that workmen are getting more—they are getting up to £20 per week.

Where are those men?

I am not going to allow the hon. member to distract my attention from the point, but I can produce chapter and verse to prove it. The writer of this letter goes on to say—

Now those are the views expressed to me by the ordinary man struggling under the conditions prevailing today in industry, and particularly those affecting the engineering business. The problem with the excess profits tax is just this, as I see it. The tax in its conception is a good one. As the Minister put it when he introduced the tax to the House—or rather in the Budget when he envisaged the tax—he said that this tax was not only required to produce revenue, but—and these are the important words—“also to discourage the making of excess profits at the cost of the consumer.” We all know what happened in the last war. Prices went sky high. Colossal profits were made and many envisaged that a similar condition might be repeated in this war. If one were to tax the excessive profits at 20s. in the £, that is excessive profits made as a result of war, I am sure that not a member in this House would raise one word in protest against such a measure. The trouble has arisen because nowhere in the world has it been possible to evolve a suitable definition of the term “excess profits,” and on the definition so far evolved—and I say this because I realise the Ministers difficulties in the matter—the tax is levied upon all additional profit made. The additional profit may be a normal profit. It may be the normal profit that is made in peace time, or profit at a lower rate than normal. There I feel lies the crux of the issue, that this tax is levied on every additional £ of profit made over the pre-war profit. The Act allows 8 per cent. as the statutory percentage, so that everything made over 8 per cent. on the capital employed is taxed at the rate of 13s. 4d. in the £. If a more equitable basis could be evolved and the tax levied on the excessive profits, this debate would not have taken place. It is axiomatic that in business one must maintain a certain rate of profit, and that the larger the business the larger the profit must be, because of that ratio. It is quite unsound if some such ratio is not maintained in business, and, if we are to build sound businesses, we should enable business concerns to maintain a sound ratio of profit. I am wondering whether it is this very reason, which prompted Australia last year to abandon the excess profits tax, and to supplement it by another tax. I believe that is the reason, and when you read of what is going on in England, when you read of the outcry there against this tax, and when you read of the ouctry in other countries, where there are similar taxes, one is forced to realise that the grievance against this tax is not confined to South Africa. But I do say this, that it is probably applying with greater severity in South Africa than in other countries, because I think I am correct in saying—and the Minister will correct me if I am not correct—that in England there is a little more equity in the treatment of taxpayers in the way of allowance for depreciation of machinery and for obsolescence. Admittedly the Minister announced last Session that he will go into the question of obsolescence of buildings. Under our present taxation we must remember that there is no allowance made for depreciation on buildings. There is allowance for depreciation on plant; and it is conceivable that buildings constructed in a period of war may be of little or no service when the war is over, and may be completely obsolete and may have to be written off as a loss. I want the Minister to go very much further than just this bold statment, and to come out with a concerete scheme, because that will help new industry a good deal, so that a person embarking on a new enterprise will have some idea of what he is going into. Today he had to rest on the words of the Minister last Session, who said that when the time arrived he would consider this question of the obsolescence of buildings, and I feel that if the Minister would direct his attention to that point before he brings in his budget, and produces something which is understandable to the man in business, that it would go a long distance towards clearing the air. This problem of the definition of “excess profit” I feel raises the question whether an excess profits tax is not a penny wise and pound foolish tax, because the alternative advantage of the tax, its revenue raising propensity, is to a large extent problematical. I do not see how anyone can say what revenue this tax will yield until it has been repealed, and the necessary adjustment made, because where profits fall below the pre-war standard we shall find that substantial refunds will yet have to be made. I may say that many firms would not like to see the disappearance of the excess profits tax now, because they feel that they have accumulated quite large reserves under the tax, against the time when losses are made, and they will then be able to get back by way of refund large amounts. This feature makes it very difficult to suggest that this tax should now be abolished. In fact after three and a half years it is probably impossible to make such a suggestion, and the alternative is to set about improving the tax, mitigating the lot of new enterprise, so as not to stifle new enterprise. After all, in a young country like South Africa, our heritage is our right to develop, and I want to ask the Minister the question, whether had it not been for the well-established companies, which we have in this country, companies other than gold mining which were able to establish strong positions on taxation of 1s. 9d. in the £. I want to ask the Minister from where we would derive the substantial revenue which we are getting today. It is those companies that are producing such substantial revenue today, and to me it is unfortunate that we should have a tax on our Statute Book which militates so strongly against the progress of industry. A further difficulty is this, that in our taxation measures there is a tendency to play about with the private company. When I talk of the private company I am not talking of the company with millions of money, I am talking of the many ordinary companies where perhaps three, four, five or ten individuals are associated for the purpose of carrying on a business. For purposes of the normal and super tax a private company is treated as a partnership and the profits are apportioned between the shareholders, but for the purpose of the Excess Profits Tax the private company is treated as a company, and it is only granted the one abatement. Now, a partnership also has its profits apportioned among the partners for the purpose of normal and super tax, but we have this distinction, that for the purpose of excess profits duty the partnership has the profits distributed among the partners, and each partner is allowed a certain abatement. We have the same weakness transferred into the Trade Profits Special Levy. We have the same anomalous position in that tax, and I feel that it is incongruous that for one purpose a company is treated one way, and for another purpose it is treated in a different way. It is just like tossing a double headed coin, and calling “heads” every time. The coin always comes down heads. Then in the Excess Profits Tax the question of succession arises. The hon. member for Germiston, South (Mr. Strauss) mentioned this aspect, but I want to elaborate on his remarks slightly, because the question goes further. Now, in this connection the private company is favoured, because the pre-war standard is continued when shares are transferred, but, if a person or a partnership establishes a successful business, and wishes to transfer or sell that business, they cannot transfer with it the pre-war standard of profit, which that business had earned. Now, this point is raised because a person may wish to sell a business or a deceased estate may have to sell a business, and under the present operation of the Act it must certainly have a detrimental effect on the capital value of the asset. Finally, I wish to deal with the Revenue Advisory Committee. In England a Board of Referees was established in order to alleviate and to iron out some of the great difficulties which apply to business and industry. In England in the last war the statutory percentage was fixed at 6 per cent., and the Board of Referees went into a large number of trades and industries, investigated them and fixed varying rates of statutory percentage. I have here a list of two foolscap sheets of awards that were made by this Board of Referees.

Is that for the last war?

Yes, that was in the last war, and it is quite evident from this list that the very same difficulties which we are dealing with now were uppermost in the minds of that Board, because if you consider that list, you will see that while it refers mainly to mining, it also refers to other issues as well. For instance, against the statutory percentage of 6 per cent., they fixed agriculture in Greece at 12 per cent. There was provision for mining in various parts of the world—tin mining, coal mining and so on—and these were fixed at rates running up to as high as 27½ per cent. Their method of handling the problem has this advantage, that everyone engaged in that particular trade or industry would know what the appropriate statutory percentage actually is, and the world would also know. There is no hole-in-corner aspect about it. But here we have established a Revenue Advisory Committee, and last year I asked the Minister for some information as to the Committee’s activities. He did not give that information. The Committee is established for identical purposes, namely, to consider cases where there is hardship and to see whether the difficulties cannot be ironed out, but it has no power other than to make recommendations to the Minister, or, rather, the recommendations are made to the Commissioner, who is quite at liberty to accept what they advise or not. Now, no one in South Africa knows what their recommendations are. The public in South Africa does not know what concessions have been given, and to whom concessions have been given. It is to my mind a very serious defect that the Revenue Advisory Committee can act in that way, because after all is said and done, taxation should be something that is of public knowledge. People should know exactly what is being done and what the position is, but here we find a body that can award concessions to A, while B, who may be in the same plight, knows nothing about it and may be treated quite differently. That, I think, is leading to quite a degree of differentiation. A further point is this. When this Committee was established, the Minister in announcing the personnel of the Committee made it very clear that it was not his intention to put a civil servant on that Committee and that it was going to be an independent Committee; but it is unfortunate that a short while later he appointed as the Chairman the man, who had just retired as the Commissioner, the man who was responsible for the production of the first Excess Profits Duty Bill in 1940. He was appointed as Chairman of this Committee. A further point is this, that in the composition of the Income Tax Special Court it is provided that where a mining case comes before that Court, a person may have sitting as an assessor a mining man, and I think the same provision should be made in regard to the Revenue Advisory Committee. At present we have the ex-Commissioner as Chairman, along with an accountant and a commercial man, but there is no provision for a mining man. I hope the Minister will give thought to this point and enlarge the Committee. He has power to do so up to five, and to constitute it on a similar basis to the Income Tax Special Court, that is, to allow in a mining case a mining man as a member of the Committee. I feel that this will help considerably in arriving at decisions in mining cases. There must be many mining cases coming before it. With regard to the amount of revenue and the final portion of the amendment, this war has to be fought and has to be won, and it will require a considerable sum of money to do so. This we all know, and I am quite sure that all, who are paying taxes, are prepared to pay and pay even more heavily. They are prepared to be taxed more heavily under other taxes. If we could aim at ironing out the serious obstacles which are being experienced by new industries, and particularly if we could eliminate them in the lower end of the scale of profits, we shall achieve much for the future of South Africa, and shall lay a foundation which will be of great strength and permanence. The re-employment of our men, when they come back from the war, is going to be a problem of great magnitude. It will be one of the greatest problems we shall have to face, and the preparation for the extension of industry to meet these difficulties should be a matter of serious and urgent consideration. No better way of giving consideration to this problem can be found than to remove or adjust this taxation, even if it means remitting revenue in that direction. It will mean remitting taxation which is impeding the development and expansion of industry. By doing so we shall go a long way towards solving important problems, which are blowing up on the horizon, and I hope the Minister will give his most serious consideration to the matter, when he comes to consider the whole question of taxation. I am glad the House has had the opportunity of discussing this matter, because I just want to say in conclusion that the country is very much disturbed by the fact that this taxation to which I have been drawing attention is tending to strangle seriously new enterprise and new industry.

This debate has made one thing very clear today and I hope the hon. the Minister of Finance will take it to heart, namely, that there is a deep-seated feeling of dissatisfaction in connection with the Excess Profits Tax in its present form. This tax in its present form is hated. It is hated by everybody who is in any way concerned with business in the country. It is hated even by people in the old-established agricultural industry of our country. We had evidence this afternoon of the fact that it is hated to such an extent that even party discipline and party loyalty are unable to keep hon. members opposite quiet.

It is not a question of party discipline and party loyalty.

Last year during the Budget debate I warned the Minister that his fate might be the same as that which overtook the late Minister of Finance (Mr. Burton), anti I want to say this to him: if he fails to heed the voice of the people which has been sounded in this House in regard to his unfair and unjust tax, his fate will be the same as that which overtook the late Minister Burton. He is not only going to wreck himself, he is not only going to wreck his Party. The worst of it is that he is going to wreck the spirit of enterprise and the industrial development spirit in this country, and that is what I would deplore most of all. My difficulty is this. We have this motion of the hon. member for Pretoria, District (Mr. Oost) before the House, together with an amendment proposed by the hon. member for Germiston (Mr. J. G. N. Strauss). The hon. member for Pretoria, District, only talks of the harm that is being done to young industries.

Particularly to young industries.

That is not what the motion says. The hon. member has restricted his motion to young industries and to their sufferings from this tax. Now hon. members opposite come along and they move another motion, namely—

With this I am in hearty agreement. That is to say with this part of the proposal. The motion does not propose to restrict it to young industries, but it asks the Minister to enquire into all anomalies resulting from the tax, not merely in regard to specific industries, but also in regard to commerce, agriculture, salaried people, people living on their interest and so on. All anomalies have to be enquired into and have to be removed. Anything standing in the way of the country’s economic development has to be eliminated. I am in favour of that. But at the end of the amendment we have the fly in the ointment, and this is what is proposed there—

It is proposed here that the money which is needed by the Government to waste it on the war must come before everything else. That they place as No. 1. I am not in favour of that, and because I consider that the motion of the hon. member for Pretoria, District (Mr. Oost) is not sufficiently comprehensive I want to move another amendment—

This amendment does not go as far as the amendment proposed by the hon. member opposite (Mr. J. G. N. Strauss), but I am satisfied with it. The small amendment at the end is necessary in view of the first portion of my motion. I am therefore asking for the elimination of all anomalies standing in the way of development, standing in the way of industry, commerce and also agriculture. It must be made possible to build up reserve funds, which we know will be most essential when the lean years come after the war. I hope that my amendment will meet with the approval of this House. Let me explain briefly what the attitude of this side of the House is on this question. From the very start we have declared ourselves against war profits, against any abuse of war conditions to make excessive or undue profits. Personally I feel that it is a crime under the abnormal conditions prevailing today to enrich oneself at the expense of the community and to my mind the Government cannot take steps sufficiently drastic to put a stop to that sort of thing. What, however, worries this side of the House, and what I want to bring to the Minister’s notice, is that the Government is aware of the fact that excessive profits are being made, and the worst of it is that the Government is aware of the fact that the biggest profits are made out of contracts obtained by people from the Government itself. The largest profits of that kind are made by people who have contracts from the Government. If the Government takes drastic action against those people it will have the full approval and the full support of this side of the House. I am even prepared to go so far as to say that in principle we are in favour of the restriction of personal earnings and profits. That is a principle, which is gradually being accepted throughout the world. Nobody in a time like the present should be allowed to make a personal profit of £30,000 per year.

Who has made such a profit?

We shall have the opportuity later on of going into that. It would meet with our approval if such a restriction were imposed, and as a matter of fact they are already taking such action in America.

Not yet.

Well, anyhow, they are talking about it. If they have not put it into effect yet, then let us, as we always do, take the lead, and be the first. We are in favour of a restriction of personal earnings. We feel that it is a disgrace that if an industrialist makes a profit today of £5,000 and that if he has no pre-war standard he has to pay £3,000 of that profit to the Government, while the Chairman of the Chamber of Mines can draw a salary of £10,000 or £15,000 without having to pay a penny under this particular tax. It is the inequality of the burden of this tax which causes people to be dissatisfied. It is making fish of one and flesh of the other. The one man is stripped of all he has and his business is ruined but the Minister shows his sympathy towards the other man.

But the other man supports the Government.

I don’t want there to be any misunderstanding. We are opposed to war profits; we are opposed to improper profits at any time. We even go so far as to say that we are willing to place a restriction on personal profits and earnings so as to prevent some people in the country from getting too much while others are not getting enough to live on. When, however, we take something from the rich, we do not want to dissipate all we take in powder and shot, but we want to use the money en enable the poor to live more happily and under better conditions. So far as the general question of war profit is concerned I want to say that experience has taught us that the best way of contending with war profits is not by means of taxation. By trying to cope with the position by means of taxation, means creating too many hard cases. So far as this tax is concerned hard cases are not the exception but they are almost the rule. If the Minister really has South Africa’s welfare at heart he will have to follow some other course in order to put a stop to war profits and he will have to do it by means of a fixation of prices.

We have that, we have both.

That fixation of prices should apply in regard to everything that is sold and not only in respect of war supplies. It should also apply to everything that is being manufactured in this country. A great deal can be done in that way without creating hard cases. Our objection to this tax is that we are opposed to war profits and to excessive profits but we say that this tax is stifling all spirit of enterprise in this country, people are scared to start anything new because the risks are too great and they are not able to build up a reserve, because everything has to be handed over to the Minister. In those circumstances they are not prepared to run the risk. Last year I gave the House some figures, and I think it is worth while repeating them. Just before the war started, in this country companies were established whose capital amounted to £25,000,000, and the number of companies was 1,561.

In what year was that?

That was in 1937—’38. The number of companies established was 1,561 with a capital of £25,000,000. That was new capital invested in the development of commerce and industry in this country. Since the introduction of this tax, however, the number of companies has decreased. People are not prepared under such conditions to invest capital in industry. In 1941 the amount of money invested in this way dropped to £2,900,000. The hon. member for Kensington (Mr. Blackwell) may perhaps say that that is due to war conditions. I therefore want to quote what happened during the last war, from 1914 to 1918. In 1914 when the war started, 280 companies were registered with a working capital of £4,500,000. During the war the number went up to 607 companies with a working capital of £11,000,000.

Mushroom industries.

Yes, the hon. member over there must have something to say. In the last war we had this great development because we did not have this kind of tax, and the capital which was invested every year went up from £4,500,000 to £11,000,000. In this war, however, we have had the very opposite, and the capital invested has dropped from £25,00,000 to £2,900,000.

But in the last war we also had this kind of tax.

Not in the form that we have it today. All of us are opposed to war profits, but we don’t want to have anything to do with this form of taxation. We say that the anomalies should be eliminated, not only in regard to industries, but also in commerce and in agriculture. May I just be allowed to mention just a few instances. The hon. member for Pretoria District (Mr. Oost) takes up the attitude that the tax is not justified in so far as young industries are concerned. But the very same thing applies in respect of new undertakings both in commerce and in agriculture, and an injustice remains an injustice. If it is unjust in regard to new industrial development then it is also unfair in regard to new enterprises in the commercial sphere and in the sphere of agriculture. I again want to quote a few instances which have been brought to my personal notice. The one is the case of a man who is half a farmer and half an industrialist; some twelve years ago the farmer started a big plantation on his farm involving big capital expenditure. He was not allowed at the time to put in his capital expenditure for income tax purposes. The investment of money in the laying out of a plantation is not an attractive investment. And because of that it is done in most countries by the State itself, because it means taking money and putting it into the enterprise and for twelve years one does not get a penny by way of interest. That man’s money lay there for twelve years and he had to incur further expense all the time. Last year the plantation reached its production stage. It has nothing to do with the war. Twelve years ago he could not have anticipated that there was going to be a war.

But the price of timber is higher today than it was before the war.

That has nothing to do with the matter. Practically everything this man gets out of his plantation today goes to the State. Is that fair? Is there not something wrong somewhere? This matter has been brought to the notice of the Advisory Revenue Committee. What is going to become of it I don’t know. About twelve years ago that man started his plantation and he has never drawn a penny of interest on his money. Now he has reached the production stage and the Minister steps in and takes all his money. Now, let me mention an instance in the commercial world. I mentioned this case last year; it is the case of a couple of young Afrikaners who started a business in the Free State. They did not realise that they were entitled to appoint themselves as directors and to vote themselves a salary. They live from hand to mouth in order to get the business going. At the end of the year they had a profit of £300 and of that £300 the State wanted to take a little more than £150.

They should have made more than £1,500.

I brought this matter to the notice of the Minister and it was placed before the Receiver of Inland Revenue.

Their case was met.

Yes, but there are more cases of that kind. Now, let me mention the case of a man whose business is producing less profit than before the war. So this is not a case of war profits. I know of a partnership which last year made less profit than it did in the year before the war. It was a partnership and in terms of the partnership the profit of the business was divided between the two partners and each of the two partners paid income tax on his share. One of the partners died during the first year of the war. On account of the uncertainty prevailing nobody was prepared to join the other man in business, so he had to try to get the necessary capital in order to buy out the heirs. He did so, and he got himself very deeply into debt so that economically his business was affected. To his surprise he subsequently found that although his taxable income last year was less than before the war, he was assessed for more than £3,600 on a taxable income of less than £6,000. The business made less profit but it was regarded as a new concern and consequently this heavy tax had to be paid. It knocked the business so severely that the man will find it very difficult to keep going. I can also mention an instance in the farming line. There is a farmer near Cape Town who has a farm which he has developed on excellent lines. The man dies and he leaves his estate to his son and his two daughters. That is to say, the farm had to go to the son, but the son had to pay out his two sisters. There was no cash in the estate, and the son had to take up bonds on the farm in order to pay out the sisters. Economically therefore the farm is in a worse position that it was in before. It is a fruit farm and last year the profit was less than it was before the war. The profits on the farm went down by £1,000 and yet that farmer suddenly had to pay excess profits tax to an amount of between £700 and £800 because under the provisions of the law his enterprise, his farm, is regarded as a new enterprise. These are instances which one comes across almost every day. These are not exceptions, but there are numerous new enterprises or so-called new enterprises which are affected in this way, and it is for that reason that I wish to amend the motion of the hon. member for Pretoria, District (Mr. Oost) in such a manner that it will not only include new enterprises. The cases I have mentioned are old concerns, but the moment they pass from father to son they are new enterprises in the eyes of the law, and the tax which has to be paid on these concerns is entirely different from what it used to be.

If it is a company, and a man inherits a share, then it is not a new enterprise.

That is why these anomalies should be enquired into, so far as agriculture is concerned as well. It is not impossible to remove those anomalies, and I hope I have now made the position clear. I feel that there are only two tests which we should put and the one is whether a business is making a larger profit that it made before the war. If so, it is war profits. But where one gets a case of a business making less profit, such a business should not suddenly be taxed in the way I have indicated—the tax should not suddenly go up from £1,000 to £3,600. It is a cruel system which is not in the interest of the country, and it should not be allowed to continue. I hope that I have explained the attitude which this side of the House adopts.

I wish to point out to the hon. member that this amendment also has the effect of materially extending the scope of the motion. In accordance with the ruling already referred to, I am unable to put that part of the amendment which would have the effect of extending the motion to farms and farming operations.

May I know what the objection is?

On the 25th October, 1927, a ruling was given that if a motion is before the House no hon. member is permitted to move an extension of such a motion. He must keep within the limits of the motion and he must not extend it to matters which are not relevant. The wording of the amendment is such an extension of the original motion and I am sorry that I cannot accept it, because the amendment proposes to extend the motion to commerce and agriculture, and in accordance with the ruling given on the 25th October, 1927, this is not permissible. That ruling related to a similar point and it also concerned farming.

I am encouraged in moving my amendment by your acceptance of the amendment of the hon. member for Germiston, South (Mr. J. G. N. Strauss). That amendment went further than my amendment because it aims at removing any restriction of sound economic expansion.

May I just point out that in the amendment proposed by the hon. member for George the word “agriculture” appears. That is an extension which is not permissible.

The hon. member for Germiston, South, asks for the elimination of all anomalies, including anomalies in connection with agriculture. There is no restriction in the amendment of the hon. member. Surely farming occupies an important position in our economic system, and if you allow that amendment then I really fail to see why my amendment should not be allowed.

The hon. member for Germiston, South, confined himself to the original motion, and I am sorry that the extension to “agriculture” cannot be allowed.

In those circumstances I shall withdraw my amendment and I prefer to support the motion of the hon. member for Pretoria, District.

May I ask why agriculture is not an industry? Surely we always look upon agriculture as in industry.

The ruling I have given is in accordance with the ruling which Mr. Speaker gave in similar circumstances in 1927.

Are we to deduce from that that it is laid down in your ruling that agriculture is something different from an industry?

Mr. Speaker has already given a ruling on a similar case and we must adhere to that.

The hon. member for Pretoria District (Mr. Oost) in his motion asked for concessions so far as young industries are concerned. He did not mean by his motion that the word “industry” should be resricted to factories. There is nothing in his motion giving anyone the right to say that only industries concerned with factories or machines are intended to be covered.

The Ruling given by Mr. Speaker on a previous occasion was given for the very purpose of differentiating between industry and farming.

But there is nothing in the motion giving me the right to say that an industrial enterprise is only a factory enterprise. The hon. member for Pretoria District put his motion very widely and in accordance with that motion the agricultural industry would be part of it. Agriculture is an industry and with all due deference I wish to say that the hon. member for Pretoria District could not have meant by his motion that the agricultural industry should be excluded. For that reason I want to ask you to take your ruling into review, because the hon. member for Pretoria. District did not attach a limited meaning to the word “industry,” and as the amendment now mentioned a specific industry I want you to consider the question of its being covered by the general motion.

I am sorry but I cannot divert from the pervious ruling given by Mr. Speaker. Does the hon. member withdraw his amendment?

Would you give me an explanation for the reason of your ruling? Is it because the word “agriculture” is mentioned in the amendment? As already explained by the hon. member for Waterberg (Mr. J. G. Strydom) where the original motion speaks of industries, it may be assumed that the agricultural industry is included. Is your ruling given simply because the word “agriculture” is contained in the amendment? We should like to know exactly what the reason is.

Mr. Speaker some time ago differentiated between industry and farming. That was his ruling on the same point which is now before the House.

Under your ruling my amendment therefore drops.

As I have listened to this debate this afternoon and heard the doleful tales of one hard case after another, I have been reminded of a remark once made by an Irish Minister of Finance, that there is more joy in the Book of Lamentation than there is in any Budget. If that be true of a peace-time budget, and that was the reference, it is still more true of war-time budgets. The hon. member for Pretoria, District (Mr. Oost) opened this debate on a matter to which he had given a good deal of attention and which he has studied very carefully. As I listened to his dulcet tones in introducing the debate, in the words of the song, “I dreamt that I dwelt in marble halls.” But, sir, the hon. member for Pretoria, District, though he laid emphasis in his motion on new industrial enterprises, went a good deal beyond that. Indeed, sir, he declared that the excess profits tax as such was of the devil. In other words, sir, he used his motion as a means of attacking the excess profits tax as a whole. The hon. member for Germiston, South (Mr. Strauss) followed him up and moved an amendment, and also had something to say about new industries. But he will forgive me if I say that I got the impression that he also was using the sad case of the new industries as a stalking horse for a general attack on a tax which he dislikes, because it produces a great deal of money. Now, as the hon. member for Germiston, South, has covered rather a wider field in his amendment than the hon. member for Pretoria, District (Mr. Oost) has done, I propose to deal first with his amendment and I hope my hon. friend over there will not take it amiss if I do so. I have no objection to this amendment as it has been put. I need hardly say that what makes it acceptable is its proviso at the end, which the hon. member for George (Mr. Werth) so cordially dislikes. The hon. member for Germiston has asked us to enquire into the operation of the Exess Profits Duty with a view to the abolition of anomalies—we are always doing that. And then he goes on, “Having regard to the revenue required by the Government to bring this war to a successful issue” and so on. Now, that is what I like about this. You see, it means quite a lot. As hon. members know, there are some heads of revenue which are decreasing today, notably customs. It means therefore that my hon. friend and others, who think as he does, will be prepared to support increases under heads of revenue, but it means even more than that. It means that even if the Government requires more money for the full and successful prosecution of the war than it has required so far, if in other words we have to produce a larger amount in taxation than we are doing now, my hon. friend will help me. That is what the amendment means. I am glad of that.

So will the hon. member for George help you.

But it means something else as well. It means that if any of our existing taxes are to be surrendered, involving a large amount of money, the onus is on my hon. friend and those who think like he does to suggest means to make good the shortfall.

You are very optimistic.

If my hon. friend comes here and root and branch condemns a tax as he did condemn it root and branch in his speech, if he condemns a tax which on our Estimates is said to produce £7,500,000, the onus is on my hon. friend to say where you will find that £7,500,000, and he has not discharged that onus.

Reduce your war expenditure.

Now I come to the body of the resolution. As I said before, we are at all times prepared to enquire into the operation of the Excess Profits Duty or of any other tax with a view to the elimination of anomalies, and as the amendment says, with a view to the prevention of checking healthy economic expansion. Let us look at that. We have heard a good deal from my hon. friend about the check on healthy economic expansion. The House seems to have forgotten that only yesterday it voted an additional amount for the Industrial Development Corporation. Someone said that we had frustrated the Industrial Development Corporation.

Dr. Van der Bijl said so.

No, I don’t think he used that word. On two occasions during this financial year we have voted money for the Industrial Development Corporation. It is getting on with the job of establishing new industries. When I introduced the Additional Estimates I told the House of the new industries in which that Corporation was interesting itself. Let me mention them again. The Salt Industry, the Plastic Industry, Animal Feeds, the Heavy Engineering Industry, the Paper Industry, Cotton and Wool Textiles. No, there is not that check on the development of new industries which we might hAve been led to believe from what we heard here this afternoon. The money involved in these new industries runs into millions. The hon. member for George made a point that we had not been establishing so many new industries during this war as during the last war. There is a very obvious reason for that. It is not due to the Excess Profits Duty, but it is because our war industries which have been established on so tremendous a scale have absorbed our manpower, have absorbed our resources and our material. That is the reason. Now hon. members went rather further. They shed tears over the sad plight of the Industrialist today under this terrible taxation which is imposed upon him. And some hon. member even went on further and spoke about the taxpayer who is faced with ruination. Yes, sir. I wonder what hon. members inferred from that. I happen to have before me some figures showing the latest quotation from the Stock Exchange of the shares of industrial concerns compared with the quotations just a year ago. I don’t find much ruination in these figures. I shall take first the figures in relation to some of my best friends, some of the heavy taxpayers some of those who are contributing largely to this Excess Profits Duty. I find African Cables; there is a percentage increase in the value of its shares of 59 per cent. African Clothing, 5 per cent., Associated Manganese 30 per cent., Chapelat Choclates 30 per cent., Goodwear Shoes 30 per cent., Greaterman’s Stores 45 per cent.; Saker, Bartle & Co., 30 per cent.

But all those are old companies.

Yes, that is true, but I was told that they were also faced with ruination. I was told that it was the existing taxpayer who was faced with ruination. My hon. friend for Germiston South, did not concern himself with new companies only.

But those figures prove our point.

Thus my hon. friend must be heartily in favour of the Trades Special Levy. Now I have some other figures here; African Caterers 50 per cent.; African Theatres 60 per cent.; Amalgamated Hotels 16 per cent.; Anglo-Alpha Cement 564 per cent.; Atkinson Oates 100 per cent.; Thomas Barlow & Sons 60 per cent.; Hume Pipes 12 per cent.; Imperial Cold Storage 16 per cent.; Marble Lime Company—I seem to have heard that before—175 per cent.

Well, we shall see what these figures are next year.

There is only one company which shows a decrease. I do not see much sign in the face of this that the taxpayer is faced with ruination, and I do not see, if I may quote the words used by the hon. member, that today the checks on healthy economic expansion are really so very great. Then we were told that we must remove anomalies, and the hon. member for Germiston South, had a good deal to say about equality of sacrifice. Well, may I in that connection repeat what I said before. We are always doing our best to remove anomalies. We are always doing our best to make our taxes as equitable as possible. It has been admitted in the debate here that we took such steps in the 1941 Budget, and it has been admitted that we took further steps in the 1942 Budget. I have already said in the House this Session that minor rectifications of our taxation proposals have been considered and that we are always prepared to consider them, and we are actually considering them today. I am not going further than that for obvious reasons. I am not going into details with the Budget to be introduced in six or seven weeks’ time.

That is a long way off.

Minor rectifications we are prepared to consider but anything in the nature of large scale remissions of revenue cannot be considered in present circumstances. We have heard a lot about this ideal of equality of sacrifice. I believe I am regarded as an idealist. The hon. member for George quoted some American writer about me the other day. He said something about my head being in the clouds.

No, your feet are firmly planted in the air.

Well, I think in this matter of taxation I am rather more of a realist than either the hon. member for George or the hon. member for Germiston, South. Perhaps it is their feet which are firmly planted in the air. You see, I am quite prepared to admit that no system of taxaation either in war time or in peace time is completely free of anomalies, or entirely a hunderd per cent. equitable. It just cannot be done because you are dealing with a complex economic structure and no taxation system can be made to fit into, to dovetail into every detail of that economic structure. Let me illustrate. I shall start with our peace time system. You get two men living side by side in Cape Town; each has an income of £1,000; each has his own house in which he lives. Now A is moved by his employers, he has to go and live in Port Elizabeth. He lets his house in Cape Town, and he pays the same amount of rent in Port Elizabeth. The two things cancel each other out, but A now has to pay more income tax than B because his income has gone up.

Yes, but that is indefensible.

No, it is not. There may be good reasons for it. There is an overriding equity which goes further than the immediate inequity. There is the principle of encouraging house ownership. Moreover you cannot cover every case in taxation legislation. Now, take the sad case of the bachelor for instance.

That must interest you.

Yes, I am interested in this. I am taking three people with the same income. You have one bachelor who has no family ties and no obligations. He lives in an hotel, a flat or a boarding-house. You take another bachelor. He has family obligations, he has to maintain a house just as a married man. Then you have the married man without children who also has to maintain a house. Now, that second bachelor’s position, that of the man who has to maintain a house is much nearer the position of the married man than that of the bachelor, but when it comes to taxation you treat him as a single man. You cannot meet all these individual cases in your taxation system.

Of course a bachelor can get married.

In that case of course the rectification lies with him and not with the Minister of Finance. I say that there are these inequities. Most of us are conscious of these inequities during the time of peace, but for the most part there is not much involved, but when the amounts involved begin to climb up then the shoe pinches and the sense of grievance is increased. That is why you hear so much about grievances against the Department of Inland Revenue, and against the Minister of Finance. The shoe is pinching to a greater extent.

No, that’s not the point.

Oh, yes, it is. I also have a grievance against the Department of Inland Revenue. You know on Christmas Eve this year I received from the Receiver of Revenue my income tax assessment.

Serves you right.

That was a Christmas box I got from one of my own departments. I had to let the Commissioner know that outside the Government Service people had been sacked for less than that before now. My point is this, twenty years ago I would not have worried about that, because my income tax did not stand in a very high ratio to my monthly salary, but the ratio is much bigger today, and I say again it is when the amount goes up that the sense of grievance is quickened. Let me come now to this question of war time taxation and that is where your difficulties are accentuated. The hon. member for Germiston, South, emphasised this point of equality of sacrifice. Now what does he mean? He says what hurts is that the same amount is not paid on the same income. Two people side by side with the same income should pay the same amount of income tax. What does the hon. member mean? Does he mean there must be no differentiation between income derived from excess profits, even war profits, and incomes not so derived? You have two people today shall we say with an income of £5,000. The one had an income of £5,000 before the war and the other one had an income of £1,000 before the war. The second man pays excess profits duty, he pays more than the first man. Does my hon. friend mean that that is inequitable? What does he mean by saying that people who derive the same income should pay the same taxation? Does he mean to repudiate this principle of the taxation of war wealth? The hon. member quoted my maxim about the equality of sacrifice.

Your E.P.D. is not taxation of war wealth.

The point is that if my hon. friend’s statement is to me taken literally he objects to the taxation of war wealth. That is what his statement means. He quoted what I said, he quoted what I have said on the principle of the equality of sacrifice, but even before I made that statement I had introduced and my hon. friend had voted for an Excess Profits Tax. In other words, he never accepted that statement of mine as being in conflict with the conception of an Excess Profits Tax or differential taxation of war wealth. My hon. friend made this statement about equality of taxatoin twice over.

Yes, but he was out of order.

Yes, but I cannot allow this to pass, because people outside under the cover of this appeal for equality of taxation are hoping that they will get rid of this Excess Profits Tax. They are not going to get rid of it, the country will not stand for it, this House will not stand for it, and the Government will not introduce a proposal for the abolition of this tax.

Give us a chance.

But then my hon. friend went on to deal with the position of the people who drew a big income before the war and the position of the rising professional man. Well, we thought of that last year and that is why we imposed the Trade Profits Special Levy. I remember the hon. member for Germiston coming to me to plead the sad case of the young professional man at the Bar whose income was increasing.

With his feet up.

No, no; whose income was increasing, who had to pay Excess Profits Duty, while his senior colleague with a steady financial position did not pay Excess Profits Duty. We introduced the Trades Profits Special Levy. I thought the hon. member for Germiston would have acclaimed that. It was a step towards that equity which he spoke about—towards people paying the same tax on the same income.

It was only a step.

But my hon. friend did not acclaim it as a step. Let me come to the point raised here by way of an interjection which was also raised by the hon. member for Orange Grove. The point is this, people say “Yes, it is all very well to tax the excess profits made as a result of the war; it is all very well to tax war profits, but it is wrong to tax profits which are not ‘made as a result of the war,’ profits which would have been made anyhow.” The hon. member for Orange Grove was quite fair and quite correct when he said that nowhere has it been possible to discriminate. You just cannot discriminate. Take three cases. Take the case of the man who has war contracts and whose income goes up as a result. There you have increased profits which are directly the result of the war. Then take the business which has not got any war contracts, but which has increased its turnover. There is more money in circulation. That firm is undoubtedly making money indirectly as a result of the war. Then you have the third firm which makes more profits because it produces better goods. You may say that that firm is not making more profits as a result of the war, but between these cases you have infinite gradations. You have cases where as a result of the war, profits are made on a larger scale; you have all sorts of variations. If you accept the principle of taxation of war wealth you must accept it that you will tax all excess profits which arose during the war, and that means that the man who has an increased income will pay more tax on it. That is the answer to the hon. member for Orange Grove and to the hon. member for George in regard to succession. These cases which they have mentioned are cases of people whose incomes are higher than they were before the war and they pay on that. Their individual income is higher, and therefore they pay, and they should pay. The hon. member for Orange Grove has mentioned the fact that Australia has a different system. What they call an excess profits tax is not really an excess profits tax; it is really a high profits tax.

A war-time company tax.

But it gets away from the principle of differential taxation of war wealth because it taxes just as heavily the profits derived before the war as the profits derived during the war, and I say again that we cannot get away from the principle of differential taxation. What do they do in Australia? They take companies and they start with 4 per cent. on the capital actually employed. They tax on the profits above 4 per cent., and the rate goes up and it runs from a minimum of 6 per cent. on the first 1 per cent. over 4 per cent., and it goes up to 78 per cent. When my hon. friend also comes along with a complaint that we are taxing pre-war incomes I wonder how he can in the same breath even mention the Australian system because there they have a very heavy tax on pre-war incomes. That applies to every company. My hon. friend made the complaint that we are today taxing pre-war incomes. Well, I say that if we are chastising people in this country with whips by the taxes we are imposing, if we had the Australian system, hon. members would complain that we were chastising them with scorpions. Now, there is just this further point. We tax excess profits, not excess incomes. I don’t want to go too deeply into the technical issues; I have a book here which might interest my hon. friend—I know he is a student of taxation problems—he will find this whole question discussed here, this question of the taxation of excess profits as against the taxation of excess incomes, and the conclusion come to is that you can have a tax on excess incomes as a supplement to a tax on excess profits, but you cannot have a tax on excess income as a substitute for a tax on excess profits.

What is the distinction.

The distinction is pretty clear. We define as profits the profits on trade. In trade we include professions but we don’t include salaries, we don’t include the interest on investments, and so on. We include in trade those things which are susceptible to war circumstances.

But salaries are included.

No, they are not. In the higher range of salaries where you come within the range of excess profits duty you have no tendency towards an increase. On the contrary the real value of such salaries has gone down. Lower salaries may have gone up. For instance, I don’t think the Chairman of the Chamber of Mines, if he draws a salary as such, has any more salary today than he had before. Salaries on the whole in the higher reaches have remained the same. Salaries have not gone up, but purchasing power has gone down. When you come to interest on investments, then I think hon. members know only too well that rates of interest have gone down. Now, coming to the professions, speaking generally, the income of the professional man is susceptible to war conditions. Is it not so, does it not tend to go up in time of war? Let me give a concrete case. I won’t take my hon. friend’s profession but I shall take an illustration from the medical profession. You have three specialists in a town, specialist A, shall we say, in eye complaints. He earned £5,000 a year before the war. He still earns £5,000 a year and nothing has happened to affect his work. Specialist B was earning, shall we say, £2,000 a year as an ear, nose and throat specialist. But there was another man earning £5,000 a year, and that other man has gone off on active service. Specialist B has stepped into his shoes. He is doing pretty well out of the war, is he not?

He is working harder.

He is working harder, but he has a definite benefit as a result of the war. Specialist C again has not had the advantage of a competitor going off to the war, but he gains an advantage because there is more money in circulation, because debts are better paid, because the population of the town has increased, all because of the war. Who will say, speaking generally, that professional men do not benefit from war conditions? I repeat there are three ways at least in which they benefit, first by colleagues going away, they get a benefit from that. The amount of money in circulation being larger and debts being more easily collectable is a benefit. And thirdly, I think I am correct in saying that in some professions fees are adjusted according to the capacity to pay, and if there is more money in circulation fees have a tendency to go up. Now, Sir, of course, of these people whom I mentioned, specialist B and C have a grievance against specialist A, because specialist A who has the same income as they have is not paying any more in taxation, but at least, Sir, we have in particular tried to meet that by means of the Trades Profit Special Levy, which you will not allow me to discuss in detail this afternoon. I said, Sir, that we have from time to time dealt with this question of anomalies, and we are always prepared to consider the question of minor rectifications. In 1941 we instituted a board of referees, and may I just say in passing that the hon. member for Orange Grove (Mr. Bell) has commented on the composition of that board. It is perfectly true that there is an ex-official as chairman—that is certainly not in conflict with anything I said—but there is also an ex-president of a Transvaal Society of Accountants and an ex-president of the Chamber of Industries as members, and I am informed that those three members have always been in agreement on that board. I think, therefore, my hon. friend is wrong in creating the impression that the revenue point of view is unduly prominent.

[inaudible],

It is always possible for the board to consult the Mines Department, and that will be done, but the hon. member has made the further suggestion that the board, after all, is only an advisory body. May I tell my hon. friend, and he will be interested in this, that except on the smallest matters of detail its advice has always been accepted by the commission. Well, Sir, in 1941 we created the board of referees and that board was given the power to raise the statuory percentage from 8 per cent. to 10 per cent. and to reduce the rate of the tax from 13s. 4d. to 10s., and also to make certain other concessions which I will not specify now. When hon. members speak of the power of the board merely to raise the statutory percentage by 2 per cent., they tend to overlook the fact that there are other powers as well which are very important. In 1942 we made further rectifications, and a most notable point was in regard to the allowance which might be made for obsolescent machinery and plant. Now, Sir, when one comes to consider the excess profits duty as a whole, I want to quote an authority who has already been quoted by the hon. member for Germiston, South (Mr. J. G. N. Strauss), and I therefore accept that he regards the writer as an authority. The hon. member has quoted from the “South African Journal of Economics” in his general condemnation of the excess profits duty. Well, Sir, this is, as hon. members know, a very reliable and responsible journal, and I think we can take seriously what is said in this journal. This article deals, in the first instance, with the excess profits duty as a tax in general. The writer then says what he thinks of it in relation to South Africa. I do not know whether the hon. member for Germiston, South, got rather weary in reading this article, but he did not go to the end of it. He quoted what the writer of the article had said in criticism of the E.P.D. in general, but he did not quote what his summing up was on the E.P.D. in South Africa. As my hon. friend has quoted from this article, I am also going to quote it now. The writer says—

The writer of that article has been accepted by my hon. friend as an authority. No, sir, I have not much sympathy with the critics of our E.P.D. in general. I made that qualification in regard to anomalies, and their rectification, but when you come to criticism of our E.P.D. in general, I have very little sympathy with it. Our excess profits duty is one of the mildest in the world today. The rate is 13s. 4d., and give me another country where it is less than that.

[inaudible].

So it is in other countries, but in some cases they take the lot.

But they take 4s. as a compulsory saving.

Even so they get 80 per cent., 16s., while we get 13s. 4d. I have still to be told that 13s. 4d. in the £ is as bad a tax as 16s. in the £. Well, the rate is lower than elsewhere, and we make specific provision in our statute for the refund of losses. One hon. member referred to that. We provided for four alternatives in the determination of the prewar standard. Some hon. members talked about the hardship involved in the fixation of the pre-war standard. We have four alternatives. In Great Britain they do not even in all cases allow them an alternative between the statutory percentage and the pre-war level of profits. Then our statutory percentage of 8 per cent. is a very high one. Do my hon. friends really realise that interest rates have dropped, and things which might be said of an 8 per cent. statutory percentage in relation to a period when gilt-edgeds drew 5 per cent. interest on the market, do not apply when the rate of interest on gilt-edged is 3 per cent. There is a margin of 5 between 3 and 8, whereas the margin is only 3 between 5 per cent. and 8 per cent. In addition, as I have said, we have a Revenue Advisory Committee. We are told that the Committee has not got much scope, and I have already referred to that. Critics tend to think that the Revenue Committee’s scope is limited to the adjustment of the excess profits duty statutory percentage between 8 per cent. and 10 per cent., but that is only part of their job. But even if that were the whole of the job, is it so bad after all? The hon. member for Orange Grove spoke about what was done in England in adjusting the statutory percentage during the last war. [Time limit extended.] The hon. member referred to what happened in the last war in Great Britain, but, sir, as I shall show him in a moment, the position in Great Britain in the last war has not been repeated in this war. The powers of the Board of Referees have been very considerably curtailed since the last war. If I may refer my hon. friend to this book again, I will quote a few phrases:

The writer talks of the more rigid methods, the generally sterner character of the E.P.D. No, my hon. friend cannot base his arguments on what happened during the last war. And then, sir, he goes on to point out that the Board of Referees have a far narrower range of discretion in the present E.P.D. than it had in the last war. If my hon. friend wants the Revenue Advisory Committee to have wider discretion, we might consider giving it to them. We might also consider making it from 6 per cent. to 10 per cent., but I do not think they will thank vs for doing that, because it will mean bringing down the bulk of the taxpayers from 8 per cent. to 6 per cent. I repeat again, hon. members should be on their guard against quoting from the position in Great Britain in the last war as having a bearing on the position in this war. The hon. member for Pretoria, District, also talked about the milder methods of Great Britain, but I would commend to his study the methods which are followed in this war and not the methods followed in the last war.

†*I feel that I owe an apology to my hon. friend, the hon. member for Pretoria, District (Mr. Oost). He proposed the motion and I confined myself mainly to the wider discussion which was invited by the amendment of the hon. member for Germiston, South (Mr. J. G. N. Strauss). I feel, however, that my general attitude so far as his motion is concerned will be clear, judged by the background of what I said on this general question raised by my hon. friends on this side of the House. The hon. member for Pretoria, District, pleaded the cause of young industries. Well, may I just say this—my hon. friend touched on several points which really do not come under me as the Minister dealing with taxes. These are matters which really come under the Minister of Commerce and Industries, and I assume that on some other occasion the hon. member will bring the matter to the notice of the Minister concerned. I only deal with the taxation aspect of the matter. I want to repeat that in 1941 we did a great deal to meet this aspect of the question. We appointed an Advisory Revenue Committee and that Committee was given fairly wide powers. That Committee, for instance, can make recommendations as to how capital employed in an industry can be dealt with in certain circumstances; the Committee can make recommendations in regard to granting allowances, for excess profit taxation purposes, in respect of expenditure for assets for which, for the purpose of normal tax, no provision is made. In that respect my hon. friend will find that considerable concessions are made. The Committee can make recommendations for reductions, for the purpose of excess profits duty in respect of the redemption of the expenditure on any assets for which no provision is made for purposes of normal tax. This largely affects the matter which the hon. member for Germiston, South, advocated in regard to base metals. They can make recommendations in regard to raising the percentage laid down by law on the capital employed and they can also make recommendations for adding to the pre-war standard of 2 per cent. in respect of borrowed money and employed in the business. I therefore want to say this to my hon. friend—we have not lost sight of those points which he has mentioned. In order to deal with those points we made provision for the extensive powers of the Committee and last year we went further. I then dealt with this matter in my Budget speech and I made it clear why we could not depart from the percentage of 8 per cent., but I further said that we realised that a special case could be made out for the industrialist who had bought machinery since the war, which would probably be obsolete by the time the war ended. Provision is also made for that. I am sorry we cannot go further than that. I have already referred to what has happened in regard to the Industrial Development Corporation. Development is going on. I want to repeat again—that as we have already gone as far as that, it is not probable that we shall go any further in that direction. There can be no question of the abolition of this tax. The tax as a whole is a sound one. Where there are anomalies, we have tried to eliminate them and we shall continue to try to remove any anomalies, but it would be wrong to give the House and the country the impression that they can expect anything by way of reductions on a large scale in the incidence of this tax.

I move—

I move—

I want to appeal to the Rt. Hon. the Prime Minister and to ask him to allow my motion, appearing on the Order Paper, to be formally moved, and then to allow the debate to be adjourned to a later date.

Yes, I suggest that the hon. member be given that opportunity.

I want to thank the Prime Minister for his consideration, and I now formally wish to move the motion standing in my name—

1. (a) to declare as illegal the Communist Party and all organisations which propagate or encourage communistic doctrines;
2. (b) to prohibit the propagation and encouragement of communistic doctrines, whether by means of speeches, distribution of literature, showing of cinema films or by any other means; and
3. (c) to deport aliens who enunciate or propagate communistic doctrines and to prohibit entry into the Union of immigrants of whom it is known that they propagate or subscribe to communistic doctrines;

this House is further of opinion that the arming of non-European soldiers and the presence of U.S.S.R. diplomatic representatives in the Union are contributing factors towards the growth of communism and therefore requests the Government to discontinue the arming of non-European soldiers and to sever existing consular relations with the U.S.S.R.

I second.

I now move—