HC Deb 12 July 1955 vol 543 cc1734-5
38. Mr. Jay

asked the Chancellor of Exchequer whether, in view of the large capital profits made on the Stock Exchange in recent months, and the inflationary consequences of these profits, he will now take steps to introduce a capital gains tax.

Mr. R. A. Butler

The Royal Commission on the Taxation of Profits and Income discussed this matter at length in its final Report, to which I am giving close consideration, but I am not prepared to anticipate the outcome of my study.

Mr. Jay

Does not the Chancellor think that if what people earn by work is subject to taxation, there is a strong case for making capital profits also taxable?

Mr. Butler

I wish that it were quite as simple as that, so that I might pose as a hero, but the difficulty is that the majority Report of the Commission indicates some of the difficulties and the minority Report indicates some of the advantages. It is because I want time to get a fair picture of this matter in my own mind that I should not like to say anything further about it to the right hon. Gentleman today.

Mr. Nicholson

Would my right hon. Friend agree that these capital gains are rather the symptom of inflation than the cause of inflation?

Mr. Osborne

Would my right hon. Friend remember that a Stock Exchange profit is not a profit until it has been taken and the stock sold, and if there were widespread selling to take profits, all share prices would fall, and the profits would not be available?

Mr. Jay

May we infer from the Chancellor's reply that he has not ruled out this suggestion altogether?

Mr. Butler

I cannot go further than I have stated, because I do not think that it is wise to pronounce upon a matter which took the Royal Commission so many months and, indeed, years to pronounce upon without having a look both at its recommendations and the operation of the scheme in America.

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