I was adverting to the fact that the revenue authorities already have adequate powers to investigate expenses and allowances in respect of firms assessed for taxes and that no case has been made for the extension proposed in this Bill. Part IV of the Bill widens these powers considerably. When the various interests at different times made representations to have some alleviation in the tax code granted, the answer given was that this matter was the subject of inquiry by a commission and that any alteration in the structure, any changes in the allowances permitted, and generally any question of granting some form of remission or alleviation in respect of businesses and firms, would have to await the publication of the commission's report. This proposal, therefore, is a departure from what has been the generally accepted view that, until that commission reports, the law should be allowed to remain as it is.
It is a matter of some surprise that, at a time when the general aim is to attract to this country foreign capital for the purpose of development, to encourage by granting allowances in respect of development projects, or by altering the law as is at present being done in the amendment of the Control of Manufactures Act and in the measure dealing with external investment, when all the emphasis and accent have been placed on liberalising the restrictions which operate, this proposal should go in the opposite direction. Undoubtedly foreign investors will seek the place where they can get the most attractive return. It is common knowledge that particularly American industrialists and businessmen will seek to place investments where they will make the largest profit.
Already the revenue authorities have adequate powers to secure full returns on whatever expenses are claimed and full particulars of whatever allowances firms or companies seek to secure in order to cover incidentals or extra outgoings that are common in cases of this sort. The Minister apparently is worrying because companies may be including in their accounts provision for perquisites or allowances to directors which the revenue authorities consider unjustifiable. Foreign investors and even foreign technicians who might consider coming here will be anxious to know in advance not merely what terms are offered to them but what tax deductions will be made from them.
In many companies, the procedure is that a certain sum is allowed for expenses for refreshment for clients or customers, and so on. Directors or senior officials of companies are allowed such expenses and all reputable companies vouch for a sum for these items on a basis that has been accepted over the years by the revenue authorities. Some people criticise that and feel it could be abused, but anyone who has experience of business understands that it is the normal practice to entertain people when discussing business and frequently business is discussed when people are given a luncheon, and so forth. In addition, provision is made for other small matters, such as meeting these people and discussing a question with them. The provision enshrined in Part IV proposes to tighten up on that, on the basis that, as was mentioned on the Second Stage by the Minister, a similar provision was introduced some years ago in Britain.
Conditions in Britain are entirely different. They have there a very highly industrialised country, a condition of almost, if not full, employment, in contrast with conditions here where we are seeking to develop industries, where we have large numbers of unemployed and where the emphasis is on the development of industry to the maximum extent. To equate the restrictive practices of the law here on the basis that it has been done in Britain is to refuse to recognise these facts.
This is also a bad time to do it. We should not take one item and decide to deal with it in advance of the report of the Commission on Income-Tax. If we have deferred dealing with a variety of changes, such as P.A.Y.E., which we have deferred on the understanding that a commission will report on it, I feel that in this case we ought not impose further restrictive conditions in the income-tax code or in general taxation in advance of the report of the Commission on Income-Tax.