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No Dividend by E.Y.M.S. for First Time Government Blamed

26th December 1958
Page 32
Page 32, 26th December 1958 — No Dividend by E.Y.M.S. for First Time Government Blamed
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Which of the following most accurately describes the problem?

A THREE-POINT attack on Government policy was made last week by 1-1 Mr. John Spencer Wills, chairman of East Yorkshire Motor Services, Ltd., when he told. shareholders at their annual meeting that for the first time in the company's history no dividend would be paid. He pinpointed three major factors which had led to the situation—fuel tax, the increase in profits tax and the withdrawal of investment .allowances.

Out of a gross revenue of £1m. for the year, profit was £10,850, said Mr. Wills. Yet, in one form or another, £163,000 had been taken away in taxation—£91,000 for fuel, £20,000 in licence duet and £52,000 in income tax and profits tax. These taxes could be met from only one source, the passengers' pockets.

It was vital that the external conditions governing bus companies should be kept reasonable and up to date, but at present neither was the case.

"I refer particularly to the burden of unremunerative services and taxation, and to the adjustment of fares to accord with the diminishing value of money," he went on, " It is unreasonable and unrealistic to expect companies to sustain large numbers of unremunerative services out of the profits of their remunerative ones while far less than a commercial return is being earned on the capital employed in

• the business."

Over the past three years, two-thirds of the company's stage services had been operated at a loss, which represented a third of the total stage carriage mileage. it now seemed that none of the unremuncrative routes would ever pay their way, but East Yorkshire did not want to discard them wholesale. They believed that conditions ought to exist in which a network of non-paying services could be reasonably maintained,

There were two essential requirements for this, the ability to adjust fares promptly as circumstances changed, and a reduction in taxes. The Government seemed to appreciate the seriousness of the position, so it was difficult to understand their attitude.

When rolling stock had to be replaced it was invariably found that the cost of the new vehicld was far higher than that of the old one, upon which depreciation had been provided and tax allowed. Much of the past profit had to be used to bridge that gap and, as income tax and profits tax had been paid on it, the gross amount required for replacement in terms of bus revenue was nearly doubled.

The problem was similar in the case of new buildings. From 1954 to 1956 the Government had granted investment allowances of 20 per 'cent. for new vehicles _and certain plant, and 10 per cent, for new depots. It was time that these allowances were restored.

Mr. Wills did not believe, however, that the usefulness' of the provincial busindustry was coming to an end. East Yorkshire's traffic had fallen by 10 per cent. in three years, but it was still 80 per cent, higher than in 1938-39. Similar increases had been experienced by other companies, so the present decline was small compared with the expansion which preceded it.

Distance was becoming less of an obstacle in people's minds. Private motoring might well expand as fast as had been predicted, and yet leave a substantial market to be served by provincial bus companies.

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