§ Before I enter upon a discussion of that subject, I will ask the Committee to bear with me for a few minutes while I mention one or two minor changes which will require amending legislation in the Finance Bill. A recent judicial decision has revealed a flaw in the statutory machinery for the collection of tax upon mineral rents and royalties. I shall therefore have to submit to the Committee proposals for putting this matter upon a proper footing and also for maintaining the validity of the deductions of tax made in accordance with the then prevailing 918 practice, from past payments of rents and royalties.
§ I have also to deal with a technical point which has arisen on Estate Duty. This relates to the extent of the charge of that duty in a limited class of case where a claim arises under Section 2 (1) (d) of the Finance Act, 1894, in respect of the beneficial interest accruing or arising at death in certain annuities or other interests. A Resolution will be required and the necessary Clause will be embodied in the Finance Bill. Neither of these two changes which I have mentioned will add anything to the revenue; they are merely designed to safeguard it.
§ I have to mention a matter connected with the preference upon the imports of Colonial sugar. As was announced in the Press on the 29th of March last, it has been found necessary to make a change in the form of that preference to correct a preferential bias in the duty which, especially since the depreciation of the Canadian dollar, has had the effect of diverting increasing quantities of West Indian sugar from Canada to the United Kingdom, to the great embarrassment of all concerned. In agreement with my right hon. Friend the Colonial Secretary, I propose to replace the scheme of preference which was described in my Budget speech in 1932 by a new scheme which will give benefits to the Colonies of about the same value as those which they had been receiving, but which will permit the traffic in sugar to flow freely either to Canada or to this country in accordance with the normal demands of trade. We expect to accomplish that purpose by reducing the general preference on all Colonial sugar to the old rate of 3s. 9d. per cwt., and we propose to replace the quota preference of 1s. per cwt. which now is given upon a limited, but variable, quantity of sugar by a new quota preference of 3s. per cwt. on a fixed quantity of 360,000 tons per annum. The duration of this scheme will be three years, and, like the old scheme, will be subject to variations in price. The value to the Colonies of the old scheme as it was applied to their export of sugar to all destinations was £1,055,000. The corresponding figure under the new scheme is £1,080,000, so that the Colonies should be slightly better off on the whole. On the other hand, the Exchequer will be slightly out of pocket, but we have reason 919 to suppose that the small loss that will fall upon the Exchequer will be a great deal less than the loss to the revenue that would have been involved if no alteration had been made and if the whole of the Colonial output of sugar had been diverted to this country. My right hon. Friend and I are agreed that this is a fair arrangement and one which it would be to the advantage of all concerned to adopt.
§ I shall have a Resolution on two small points connected with the Hydro-Carbon Oil Duty, and there will be Resolutions authorising increased duties on are lamp carbons and patent leather. Also, there will be a Resolution covering some Amendments in the Import Duties Act, which have been found necessary.
§ There is one other small matter for which I shall have to provide in the Finance Bill. Under various Statutes His Majesty's Government have in the past given guarantees on loans raised by certain foreign Governments, by companies and by public utility undertakings. In some of these cases the prospectus of the loan named a definite date of redemption and also gave the borrower the right to redeem at an earlier date. It would now be very much to the advantage of the borrower to exercise that right if he could borrow the money at a reduced rate of interest. There are a few cases in which the borrower could do that on his own unaided credit, but if the guarantee of the Treasury could be extended to the new loans, that is the loans which would be raised for the purpose of converting the old fund, a very considerable saving of interest would ensue. This arrangement is definitely to the (advantage of the Treasury. In the first place, it means that there is a smaller amount of interest to find and, therefore, a diminution in the risk which is covered by the Treasury guarantee and, indirectly, it also helps because every such conversion consolidates the forces that are making for cheap money, which is very much to our interest. Therefore, I propose in a Clause of the Finance Bill to take power to guarantee new loans raised for the purpose of converting existing guaranteed loans. I need say no more to the Committee than that when they see the Clause they will see that it is very strictly drawn and confines the amount that can be so guaranteed to the outstanding amount of the principal of the existing loan.