HC Deb 05 March 1957 vol 566 cc154-5
4. Mr. Lewis

asked the Chancellor of the Exchequer whether, in his forthcoming Budget, he will consider making it illegal for companies to distribute tax-free dividends and share bonuses, and make all such distributions liable to a special tax in addition to the existing method of taxation, and thus assist in reducing the cost of living.

Mr. P. Thorneycroft

I cannot anticipate my Budget statement.

Mr. Lewis

Comment on that would be superfluous, Mr. Speaker, but may I ask whether the Chancellor has seen the case only last week of a well-known financier who has become a multimillionaire by take-over bids and paying himself an increase of from 40s. to 70s. per share, tax-free? Whilst not anticipating his Budget, will the right hon. Gentleman bear in mind the suggestion contained in the Question and take some action?

Mr. Thorneycroft

I will bear all relevant considerations in mind.

Mr. Wade

Will the Chancellor look into this matter from rather a different angle? Is he aware that when companies issue bonus shares to their employees, either free or at less than the full market value, the employees have to pay tax, and that that has the effect of discouraging the issuing of shares as opposed to cash bonuses and, indirectly, encourages spending as opposed to saving?

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