The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory)
I would like, Mr. Speaker, with permission, to make a statement about the Finance Bill.
I said last week that I would give further thought, before the Finance Bill, to the proposal that the legislation to deal with dividend stripping should be made retrospective to 26th October, 1955. I have done so, taking into account the views which have been expressed in this House and all other relevant considerations, including the need to be sure that the warning given in 1955 was wide enough to cover the sort of cases now in question. In all the circumstances, I am proposing in the Finance Bill, published today, that these Clauses shall take effect from Budget day.
I should, at the same time, inform the House of one other change in my Budget proposals. After considering the representations which have been made to me, I have decided to restore in the Finance Bill the exemption from Purchase Tax of miners' and quarrymen's protective boots and helmets. Tax accruing due since 16th April under the Budget Resolution has not yet been, and will not be, collected.
Mr. H. Wilson
While we welcome the Chancellor's second thoughts on the question of safety boots and helmets, which should never have been included in his first thoughts, anyway, is the right hon. Gentleman aware that the country will note with dismay this surrender to an extremely unscrupulous group of tax dodgers in this country?
Is he aware that it is the general feeling in the House about retrospective legislation that dividend stripping has been a quite deliberate tax-dodging invention over the past two years, and that a number of legitimate traders and businessmen 197 desisted from introducing these methods because of the warning given by the previous Financial Secretary?
Is the right hon. Gentleman further aware that, in view of his statement, the whole House will have to take the view that if retrospective legislation of this kind is ruled out we shall need much more thorough-going methods in the Finance Bill of controlling tax-dodging methods of this kind, which might interfere—
§ Mr. Pickthorn
On a point of order, Sir. May I ask whether all this implicit argumentation would be in order from other than Front Benchers merely by having added to it a little perfunctory interrogation in the last two or three syllables?
§ Mr. Speaker
Order. He is entitled to ask a supplementary question on the statement that has been made. I would point out to the House that this is a matter for legislation, which will appear in the Finance Bill in due course, when all the relevant considerations can be debated to the heart's content of hon. Members who hold different views on this subject. It is not a matter that we can pursue now.
§ Mr. H. Wilson rose
Further to that point of order, Sir. Perhaps it would be right, at this stage, to say that when we come to debate this matter the arguments that we shall use will go into a great deal more detail than anything which can be said at Question Time.
To finish the question which was interrupted by the hon. Member for Carlton (Mr. Pickthorn)—and I must start at the beginning so that the Chancellor can get the drift of it—is the Chancellor aware that this will mean that since the House clearly failed in its duty in October, 1955, despite our warnings at that time, it will now be necessary to go into these provisions in the Finance Bill with infinitely greater care than might have been 198 necessary if the Chancellor had stuck to his guns?
There were very difficult considerations which had to be taken into account in this case and I did not find this an easy matter on which to reach a decision. The representations which I took into account came by no means from one direction, but from many different directions. I mention among them the doubt as to whether the warning was sufficiently wide to cover the new methods which have been discovered in the meantime. I am not sure. It was my view to start with that it was wide enough, but there is a doubt about that. Another consideration to which I felt bound to give great weight—and this is one which I personally view very strongly—is that, in general, restrospective legislation is highly undesirable.
§ Several Hon. Members rose—
§ Mr. Jay rose—
I suggest to the right hon. Gentleman that that is the sort of question which we shall have a very full opportunity to discuss later.
§ Dame Irene Ward
On a point of order. As there have been questions from two Front Bench Members opposite, could not a back bencher put a question?
§ Dame Irene Ward
It will be very short, Mr. Speaker. May I ask whether I shall be able to have a quid pro quo for the small fixed income group, which will give me very great pleasure?
Mr. H. Wilson
On a point of order. I submit that this is not a point which can wait until the Finance Bill.
That is a matter which we will leave, as usual, to you, Mr. Speaker.
As a result of a decision of the Committee of Ways and Means, taken on a recommendation of the Chancellor on Budget day, tax has been levied on a small group of goods from which the Chancellor is now removing the tax. I am referring, of course, to the miners' helmets and boots, and so on. As a result of his statement today, it is now clear that that tax is to be withdrawn, but people have paid tax on those goods in the shops, because prices have been raised as a result of our decision. What steps will the Chancellor take to ensure—[HON. MEMBERS: "Not a point of order."] Yes, it is a point of order. I want to ask you, Mr. Speaker, what decision the House can take to ensure that there is a refund to people who have paid tax because of a decision of the House of Commons.
§ Mr. Speaker
As this point of order was addressed to me, I must try to answer it. The position is that a decision has been taken by the Committee of Ways and Means which embodies a general Budget Resolution. The Finance Bill has been introduced and will come up for Second Reading, and anything which is in order can be put down as an Amendment to the Finance Bill, when there will 200 be an opportunity to discuss it and to come to a conclusion upon the matter.
The Resolution does not cover any question of a refund of tax which has been wrongly paid and it will therefore, be impossible to move Amendments to the Finance Bill to give effect to a proposal to refund the tax. If we are to have these temporary forms of taxation introduced on Budget day and withdrawn a fortnight later, will the Chancellor tell the House—the House has a right to be informed—what steps can be taken to put the matter right?
There are precedents in this matter. This will be an easy case, because the tax, as the right hon. Gentleman knows, is paid at the wholesale stage. I am informed that it is extremely improbable that goods of this nature, which have attracted the higher rate of tax, will have been sold by retailers, so that the tax has not yet been paid. However, that matter, as on past occasions, is being investigated and appropriate steps will be taken if it is found that goods which have attracted the tax at the higher rate have, in fact, been sold.