286 REPORTS ON THE STATE OF SCIENCE, ETC: 
economy in Government expenditure. Mr. Hoare also answers ‘ No.’ On the 
other hand, Sir J. C. Stamp answers, ‘ Yes, as already indicated by me in 
the Economic Journal.’ Mr. Robertson also is ‘inclined to think that a 
special tax on business profits, if free from the particular defects of the 
E.P.D., and felt to be generally equitable as between different firms and 
different trades, is justifiable (2) on the grounds of equity—the rewards of 
business enterprise being on the whole disproportionate to those ot other kinds 
of mental and bodily activity; (6) on the grounds of indirect effects—a well- 
devised profits tax, pressing evenly all round, would not materially impair 
etticiency or discourage emulation in enterprise. But I am not a business 
man !’ 
Mr. Ellinger, answering 11 and 12 together, writes : ‘I hope the Chancellor 
is right, and that it will not be necessary to impose any tax in place of the 
‘Excess Profits Duty.” I do not like the French Tax on Turnover; nor do I 
like the American differentiation of spent and saved income. I think that 
the Canadian Tax on Sales is worth turther examination, if it should prove 
necessary to replace the Excess Profits Duty.’ 
Dr. Dalton, expressing the views which we imagine to be held by the 
majority of economists, writes: ‘I am not much enamoured of special taxes 
on business profits. If the difficulties of capital valuation can be overcome 
at a reasonable cost, there is something to be said for a tax progressive according 
to the rate of profits. lf not, there is a little, but not much, to be said for the 
present Corporation Tax. But as a general proposition, I doubt the expediency 
of making ‘‘A,’’ who derives a certain income from business, pay more 
taxation than ‘‘ B,’’ who derives an equal income from War Loan.’ 
Mr. Bernard Shaw writes: ‘I see no objection to giving effect to a law of 
maximum profit; but the maximum must be determined first on grounds of 
national welfare.’ 
Mr. Allen writes : ‘I am opposed entirely to the special taxation of business 
profits. Except in the case of very small businesses, where the taxation is 
negligible, business profits are already assessed up to the hilt; for the Revenue 
authorities treat as taxable a larger sum than any prudent firm of partners 
or board of directors would think it wise to distribute or treat as income. In 
the case of the professions, and of other earnings which are not made as the 
result of a regular business with clerks, ledgers, and so on, there is more 
possibility of income escaping taxation than there is in a regular business. 
Whether incomes earned in business are greater than those earned in a pro- 
fession I cannot say, except, indeed, that big fortunes are almost entirely made 
in business. There is always a risk of error if we get away from the fact 
that ‘‘taxes are paid by taxpayers.’’ Does it matter to the Chancellor of 
the Exchequer how a man gets his income? Is it not likely also that a special 
tax on business profits would in the long run tend to be passed on, like any 
other business expense, to the consumer? It would be difficult to say whether 
the E.P.D. was a direct or an indirect tax; I have little doubt that in many 
cases it was passed on, and that in most cases it led to extravagance or acted 
as a check on enterprise.’ 
Question 12.—Do you think that the French Tax on Turnover, the Canadian 
Tax on Sales, the American differentiation in taxing spent and saved income, 
or any other tax now being tried in a foreign country, would be a useful addition 
to the list of British Taxes? 
To offer a direct negative to so comprehensive a question appears to savour 
of national arrogance, and members of our Committee do not wish to say that 
nothing can be learnt from foreign and Colonial experience in taxation. Our 
general opinion is, however, that we have quite enough taxes in this country 
already, and that the main thing to be aimed at is a reduction in expenditure 
rather than the discovery of new revenue sources. 
Dr. Cannan, Dr. Dalton, Sir Drummond Fraser, Mr. Hoare, Mr. Lawrence, 
Mr. Mason, and Mr. Sykes answer ‘ No.’ Mr. Gibson and Sir J. C. Stamp 
also dislike the three taxes mentioned, but think the reference to any other 
tax used abroad too wide. 
Mr. Gibson writes: ‘Taxes on turnover or sales are difficult of equitable 
distribution and of collection. Presumably the percentage in the £ would 
have to vary with different trades, wholesale and retail. If such a tax is 
necessary, I prefer it to be collected at the spending source—a tax on income 
