§ As from the thirty-first day of October, nineteen hundred and twenty-eight, the stamp duty upon share warrants and stock certificates to bearer, imposed by the First Schedule to the Stamp Act, 1891, shall cease to be payable.—[Mr. Radford.]
§ Brought up, and read the First time.
§ Mr. RADFORD
I beg to move, "That the Clause be read a Second time."
I move the new Clause in order to draw attention to what I regard as the utter inadequacy of the present stamp duties on share warrants and stock certificates to bearer. I will deal with negotiable securities under two broad heads—those the property in which passes by manual delivery and do not require any accompanying transfer deed which has to be stamped—those are what I will term "bearer securities"; and those which are registered in the records either of the company or the municipality or the other body whose securities they are, the property in which can only pass by means of a duly executed and duly 1217 stamped transfer deed. The stamp duty on such transfers varies from £l per cent. in respect of nearly all securities down to 5s. per cent. in respect; of certain Colonial Government securities, while the transfer deeds of British Government securities do not require any stamp. The present rate of duty in respect of bearer securities varies similarly from as little as 5s. per cent. in respect of Colonial Government securities to £1 per cent. in respect of Colonial municipal securities, up to £3 per cent. in respect of ordinary stocks and shares in this country.
No doubt when these duties were first made it was intended to preserve some sort of balance between the initial amount payable in respect of the bearer securities, which freed them from any transfer duties whatever, however often they changed hands in the future, and those securities in respect of which there had to be paid a fresh transfer fee every time they changed hands. The figures, to take the simplest example in respect of ordinary stock and shares in this country, are £1 per cent. on a transfer by deed which is payable every time a transaction takes place, even if it takes place every month, and an initial payment of £3 per cent. in respect of such stock and shares should they be issued as "bearer securities," which initial payment enables them to change hands for ever thereafter free from Stamp Duty. It may be that in some cases the difference between the £1 per cent. and the £3 per cent. may be balanced, bearing in mind that much stock and many shares remain in one name or in certain names for great periods of time, without changing hands.
I should like to draw attention to the statement which was made a few months ago at the annual meeting of a large public company in this country which was enjoying unusual prosperity and whose £1 ordinary shares were standing at the price of £11. At the general meeting of the company the Chairman said that they were going to convene extraordinary meetings of the shareholders for the purpose of converting their share capital from shares registered in the company's books and transferable by transfer deeds, into share warrants to bearer. He explained the desirability of this course by giving an example. He 1218 said that assuming 100 shares in their company changed hands at the present market price of £11, the purchase consideration on the 100 shares would be £1,100 and the stamp duty on the transfer would be £11, and that if those shares changed hands a few weeks or a few months later a duty of £11 would again be payable on their transfer, assuming that the price of the shares remained at £11. He pointed out that when they had converted their capital into share warrants to bearer, in respect of this same £100 worth of shares the initial duty of £3 only would he payable, and that £3 would free those £100 of share warrants to bearer from duty for all time, as against the £11 that would have to be paid every time they changed hands under transfer by deed. I will trouble the Committee with only one other example. In the case of Colonial Government securities when they are issued as "bearer securities" only 5s. per cent. initial payment has to be made, but if they are issued as transferable by deed, 5s. per cent. transfer duty is payable every time they change hands. If that stock changes hands only twice in its lifetime, the initial payment of 5s. for bearer securities is exceeded.
I think I have made a case showing that at the present time our Stamp Duties, as regards these bearer securities and those transferable by deed, are wrongly balanced, and wrongly balanced in favour of the bearer securities; and that is assuming that either class of securities is equally desirable in the public interest. There is no doubt in my mind that the existence of bearer securities on the market is a danger, and it is only making the position worse by adding to their number. It is against the public interest. This is not the right moment to develop that argument, but if the Financial Secretary or the Chancellor of the Exchequer cares to have a talk with me at any time at their convenience, I shall be pleased to give them my views in private. I feel that this is a matter which should be dealt with, and as I am precluded by the Rules of the House from putting down any Amendment to increase the duty payable in respect of these bearer stocks and shares, the only course open to me is to move to delete this particular Clause entirely. I hope 1219 the Chancellor of the Exchequer will consider the matter betweew now and Report as to whether it is not desirable that he should bring in proposals then to make these duties more commensurate with what equity and the public interest demand.
§ Mr. A. M. SAMUEL
I do not quite understand the point at which my hon. Friend is aiming. He appears to be hostile to bearer securities, but he does not wish me to discuss the advisability or inadvisability of the existence of bearer securities. All he apparently wishes to do is to cancel the policy of imposing the Stamp Duty on share warrants to bearer in order that he may bring in legislation by a side wind to increase these duties, I should be out of order in dealing with that matter. The hon. Member himself realised that he would be out of order in moving an Amendment which would impose a charge upon the taxpayer, and as he does realise that he would be out of order in doing this, except in a roundabout way, and has asked me to consider proposals between now and the Report stage, I can only say that I cannot accept his present proposal, but will consider any proposal he would like to make if he will let me have it to deal with it on another occasion.
§ Mr. A. V. ALEXANDER
Before the hon. Member withdraws the Clause, may I say that the question of the leakage of revenue with regard to Stamp Duties in respect of certain classes of securities has already been discussed on a new Clause on the Company's Bill, and I invite the hon. Member to address his attention to the short discussion which took place in Standing Committee. Some of us will be very happy to confer with him before the Amendments are finally settled for the Report stage of the Companies' Bill, which will be in a few days' time.
§ Mr. RADFORD
I thank the Financial Secretary and the hon. Member for Hillsborough (Mr. Alexander) for what they have said, and, with the permission of the Committee, I will withdraw the Clause.
§ Motion and Clause, by leave, withdrawn.