The Tory Party was condemned and continuously attacked by both the Co-operative and Labour Movements for its discrimination against the Co-operatives during its thirteen years in power, Some of the actions that gave rise to this anger were as followss In 1956 the Tory Finance Act gave to deposit ors in the Post Office and Trustee Savings Banks income tax relief on the first £15 of interest but every penny of interest on Co-operative shares was left taxable. In 1958 the Tory Budget merged the two existing taxes on distributed and retained profits thereby increasing the Co-op rate from 5% to 10% but reducing big business from 30% to 10% thus providing them with a windfall of £16 million but costing the Co-ops an extra £14Million, Even this wasn't enough, the Tories again raised this tax from 10% to 15%. This meant a rate of tax five times higher than in 1957 for the Co-ops. Every year the Labour Party when in opposition challenged these discriminatory taxes and voted against this section of the Finance Act, Working in a vast effort the trade union, the Co-op and the Labour movements defeated the Tories in October, 1964, and the Co-operative movement looked forward to the ending of discrimination and the full recogni tion of the social purpose of Co-operation in its battle against monopoly, Instead of recognition of this special role and aid being given to help to keep down retail prices, the first eighteen months have been almost disastrous for the Co-ops because of the increased costs placed upon them by Labour Government legislation, For example, the R.A.C.S. has had to face the following increases: National Insurance, £60,0003 Postage, £3,000; Fuel, £7,000; Motor Tax, £7,0003 and local authority rates (mostly due to excessively high Bank Rate) £47,5003 a total of £129,000 as an annual increase in expenditure, All of these were followed by what appeared then as the final crushing blow, the publication of the Government's White Paper on “Investment Incentives" ," Its purpose is the substitution of cash grants for the investment allowances. This gives to manufacturing industry, almost irrespective of what they produce, cash grants of 20% (40% in development areas.) of the cost of new machinery. These grants are payable irrespective of whether the plant will be used efficiently, or even whether used at all, Machinery for making one-armed bandits qualifies for full grant as will most other machinery producing socially worthless articles for people who have capital that allows them to command resources and direct production into luxury ~ channels. The White Paper estimates that the"cash grants"* will cost between £200 million and £250 million a year and this means that, once again, the rich industries gain at the expense of the distributor, The R.A.C.S., in its efforts to keep prices down by lowering the costs of distribution, spends nearly £$ million per annum on new machinery, equipment, vehicles and plant and, on this sum, would expect a tax relief of £150,000, It will get nothing. If this were the end of the story it would be a sad commentary on the failure of a Labour Government to recognise the fundamental difference between the Co-operative movement and the profit seeking distributor, But, unfortunately, it doesn't even end there, On May 3rd, 1966, the Budget Speech of the Labour Chancellor introduced a "selective employment tax". The majority of people in this country gave a sigh of relief that income tax, fags, beer, spirits, purchase and car tax had not gone up. But it would have been much more honest of the Chancellor to state that he was introducing * Fred Styles is an active and well-known member of Royal Arsenal Co-op.
a food tax in an attempted deflationary move to take some £350 million
consumer spending power out of circulation. In this effect it is both
dishonest and unfair. It is dishonest in that it is a confidence trick that
will not be fully realised wmtil some some time after the Budget has been
forgotten and the public will blame the shopkeepers for the steady increass
in prices. It is unfair in that it abandons the Labour & Copoperative
principle that direct taxation is a fairer system because it places the
burden according to means while indirect taxation of this nature imposes
the heaviest burden on the least able to pay.
It is disastrous for the Co-operative Movement in that it will cost,
nationally £11 million, and to the R.A.C.S. £550,000. If such charges weree
to be carried without increases in prices it would have to be at the cost
of total dividend to most societies. In many of the emailer societies
(probably the majority) it would. be impossible to bsar the new tax even at
the expense of dividend, Twice in less than four months a Labour Government
has divided the business community in two: the productive and the distributive,
the former highly favoured, the latter, heavily penalised and in both
instances the Co-ops have been in the penalised group. Surely we are entitled
to ask what kind of economic reasoning is used to justify a blanket exemption
and/or a subsidy to industry chargeable to distribution?
Under present proposals we have a situation where the soft drinks industry
which last year spent £1} million on advertising and made large profits, will
be subsidised by the retail trade. We will have the fantastio situation
where the Co-operative Movement has to pay £11 million to help subsidise
such monopolies as Unilever, who recently spent £370,000 on an adverte-
ising campaign for one of its toothpastes. One can only hope that the
Co-operative MPs will urge the Government to recognise the essential social
role of the Co-operative Movement by treating its capital investment progr-
amme as necessary expenditure with full relief of taxation by means of the
new “cash grant allowances, and exempting all food shops from the proposed
"selective employment tax,"
For our Labour M.P.s one can only hope that they will press the Chancellor
to clearly define what the real obJjéct of the exercise is, He claimed in
his Budget speech "I think it is more important to encourage the deployment
of labour and to give manufacturers a relative advantage in costs compared
with the service sector, The fact that employment in manufacturing, in the
public sector, and other parts of the economy will be relieved of the tax in
various ways increases the importance of using labour efficiently in these
sectors." The Minister of Technology in a speech during the election (Cardiff
March 10th) said "In some industries the output per worker in the best firms
is seven times what it is in the worst, Ratios of 3-4-5- to one between the
best firms and the worse are common in important industries, There are few
industries in which the best firms do not organise their production so as to
get twice as much output per worker as the worst,"
Jim really must get together with Frank and find our just what (or should
that be who?) industry is doing before he subsidises them with payments from
13% million co-operators. It-is rather frightening (for a sneielist) to look
at the Corporate Income Account in the Government's White Paper and find
Profits at the highest ever level: Gross taxable prfots
Gross taxable profits all companies £4,823 million
Rent and non-trading income 896 ”
Income via investment abroad pies Ms