§ (1) Where stamp duty is chargeable under the head of charge "Conveyance or Transfer on sale" in the First Schedule to the Stamp Act, 1891, and the amount or value of the consideration for the sale is less than five pounds, the duty shall not exceed sixpence for every twenty-five shillings or fractional part of twenty-five shillings of the consideration; and the amount of any duty chargeable by reference to the said head of charge shall be calculated accordingly.
§ (2) This section shall apply in relation to instruments made or executed after the beginning of August, nineteen hundred and fifty-nine.—[Mr. Amory.]
§ Brought up, and read the First time.
§ Mr. Erroll
I beg to move, That the Clause be read a Second time.
This Clause has been put down by my right hon. Friend as the result of an undertaking given by my hon. and learned Friend the Financial Secretary to the Treasury during the Committee stage of the Bill. It proposes to introduce a further graduation of the Stamp Duty scale applicable to conveyances or transfers of sale where the consideration does not exceed £5, and consequently to reduce the duty in such cases. We do not expect that this Clause will have much application to transfers of sales of stocks and marketable securities on the Stock Exchange, since dealings in such small amounts are relatively rare. The proposal will have more effect when one takes into account the relief from Stamp Duty on bearer shares. The main object of the proposal is to give effect to a relief on bearer shares of a nominal value of less than £5.
As the House will know, bearer shares are liable to a duty equal to three times the duty which would be payable on the transfer of a share for a consideration equal to its nominal value. The rate of duty on share transfers is broadly 2 per cent., and the rate on bearer shares is therefore broadly 6 per cent. of the nominal value. It might be simplest if I give an example to the House.
1167 In the case of a share which is transferred for a consideration of £1, under the present law the duty payable on the transfer is 2s., which would be the same as on a transfer for £5. Under the Clause put down during the Committee stage, and under this Clause, the duty is restricted to 6d. In the case of bearer shares, taking the equivalent bearer share of £1, it is liable at present to a duty of 6s. With this Clause the duty on the £1 bearer share will be reduced to 1s. 6d.
In relation to stocks and shares and bearer shares, the new Clause has precisely the same effect as the one put down in Committee. In relation to other property, which is also covered, the Clause avoids the imposition of halfpennies of duty by restricting the duty to 6d. or multiples of 6d. I hope that this brief explanation will enable the House to accept the Clause.
§ Mr. Mitchison
I do not want to make a speech, Sir; I merely want to ask the hon. Gentleman a question. I understand that the Treasury opinion is that this Clause will not make much difference on the Stock Exchange because there are few transactions of this kind on the Stock Exchange. What other transactions has the Treasury in mind? For instance, I believe that some companies are now making arrangements for peddling bearer shares at companies' offices or factories. Are those the transactions to which the Clause is directed? If not, what other types of transactions have there been in the past to which this reduction would be likely to apply? I am not touching on the merits of the matter.
The Clause would undoubtedly help the scheme which attracted a certain amount of publicity when it was announced. Similarly, it will help any other transactions in bearer shares where the present incidence of the Stamp Duty is unreasonably harsh because it is levied at three times the amount levied in the case of ordinary shares.
§ Mr. Mitchison
I am sorry to press the hon. Gentleman before he sits down. My question was, in addition to that type of transaction, has there been any other type of transaction to which the Clause would be likely to apply? I find it difficult to think of one. The Stamp Office 1168 must have great experience in these matters. If so, have there been frequent transfers of bearer bonds of such small amounts? Has any inquiry been made about it?
Mr. Edward do Cann (Taunton)
Since I was responsible in Committee for moving the Amendment to which my hon. Friend has referred, I should like to take this opportunity of thanking my right hon. Friend and my hon. and learned Friend for having honoured the undertaking which they then gave to table a Clause of this kind.
§ Mr. Jay
We would like to be quite clear what it is the Economic Secretary is here proposing. If I understood him aright, I gathered that the Government are not making a general concession on the Stamp Duty in order to assist the small saver in all cases where there is a purchase of securities below a certain level. The concession they are here making refers simply to bearer securities. The hon. Gentleman is seeking to correct an anomaly which he feels exists at present as between bearer securities and other types. If that is what he is doing, I dare say it can be substantiated that this is only a technical change of no great consequence, except in the case of certain types of investment.
I am not sure that the types he mentioned would recommend themselves very much to some hon. Members on this side of the House. The hon. Gentleman referred rather briefly to the Aims of Industry scheme, as it has generally been called, which consisted mainly of the sale of bearer securities to employees in factories, where what were principally in mind were the shares of the firm owning the factory in question. We cannot debate here the merits of this as an investment proposition, but the scheme was much criticised as such. From the point of view of purchases, therefore, it would not be a great recommendation for the Clause if this is what the hon. Gentleman wishes to assist. If he were making a concession to assist the small saver generally in getting his savings into safe and well-invested media we should feel a great deal of sympathy, but I gather that he is merely making a technical change which will affect only a 1169 limited class of securities. Could he make this clear before we leave the Clause?
§ 6.0 p.m.
§ Mr. Erroll
It affects the shares transferred on the Stock Exchange to a small extent, but it has more effect on small quantities of bearer shares where the nominal value does not exceed £5. It was felt that the bearer shares under £5 were suffering a penal rate of duty compared with shares of similar size which are bought and sold on the Stock Exchange. This small change removes not exactly an injustice, but a certain element of unfairness and discrimination against bearer shares which, when traded in in small amounts, might be seen to be discriminated against.
§ Mr. Mitchison
From the Economic Secretary's answer, I come to the conclusion that this proposal has one purpose and one purpose only, namely, to lower the duty at present payable on bearer shares which are peddled in accordance with the Aims of Industry scheme. This anomaly, as it has been so called, has existed for a very long time. So far as I know, there has never been any complaint about it for the very simple reason that there have been very few transactions of this kind and therefore it has not led to any general sense of injustice.
I regard the removal of this anomaly, as it is called by the Economic Secretary, as nothing more than a scheme to assist the Aims of Industry project at the expense of the revenue. No doubt it will be of some assistance. Logically, it may be said that a minimum limit at the beginning of any scale of this kind is not an entirely logical matter and should be removed. Whatever may be the form of the transaction and however small it may be in content—nobody would pretend that it was anything more than small in content—I feel that there is an objection in principle to an amendment of long existing law and practice where there has, so far as I know, been no 1170 injustice felt and no complaint, when the object appears to be simply and solely to favour a scheme promoted by a body which I regard as part of the political organisation of the Conservative Party.
§ Mr. du Cann
The hon. and learned Gentleman said that no injustice has been felt in the past about these rates of Stamp Duty. With respect to him, that is not so. It may well be that the effect of the new Clause will be slight in the general context, but the rate of Stamp Duty in general has been a source of grievance to thinking people experienced in these matters for very many years.
§ Mr. Mitchison
That is a different point. I pressed the Economic Secretary for an answer about the other transactions, if any, which it was thought would be affected by this proposal. The answer, in plain English, was that there are very few of them. For that reason I do not think that there has ever been any complaint about it. There has been on the Statute Book a lower limit in this case, as in other cases, for a long time. As I say, there has never been any complaint so far as I know. I can only speak from what I know and it is possible that some right hon. and hon. Members opposite may know of a person who is particularly aggrieved by having had to pay too much on a single transaction of a very small amount.
When one exercises a little horse sense in the matter and looks at the motive of the proposal, I should have thought that it is obvious that it is to assist the Aims of Industry scheme at the expense of the Revenue. I disapprove of that, because I consider the Aims of Industry scheme to be an instrument of the Conservative Party.
This is a small matter. I do not know whether it is worth dividing about it. Logically, there is something to be said for it, but, politically, I do not like it.
§ Sir T. Low
I do not understand the attitude of the hon. and learned Member for Kettering (Mr. Mitchison) at all. I should have thought that, representing the other side of the House, he would be interested in the small savings of the wage earner and the small income man. As I understand, it is a good thing and not a bad thing to move any obstacle in the way of their investing in equities, 1171 ordinary shares, or anything else in the same way as he, with his larger income, or any hon. Member, or anybody else, can invest.
When it is manifest, in theory, at any rate, that the rigid minimum which will be affected by the proposed Clause must have penalised the small man, I do not see why the hon. and learned Gentleman should object to it. The only point of the hon. and learned Gentleman seems to be that this proposal may possibly help most a scheme called the Aims of Industry scheme, about which various opinions are held in various quarters of the House. Like the right hon. Member of Battersea, North (Mr. Jay), I do not think that it is the best kind of scheme, but it is a scheme. The important thing about the proposal is that it will help the man with a small amount of money to invest. That is a good thing. It is certainly something which we on this side have been supporting for some time and which I should have thought some of the hon. and learned Gentlemen's colleagues would support even if he does not support it.
§ Mr. Mitchison
By leave of the House, I should like to reply to the right hon. Member for Blackpool, North (Sir T. Low). There is a difference between some hon. Members opposite and myself, but I am not convinced about the merits of the scheme to which reference has been made for the reason which I gave. The conclusion which I draw is that the small investor has not been penalised in the past and I think that the reason is fairly simple.
Bearer bonds are not a form of security in which the small investor usually invests. They have been used in connection with the scheme because they suit the particular machinery of it, but it must have been very rare for a small investor to buy such a small amount of bearer bonds in the past. They are not the kind of things into which a small investor puts his money.
§ Question put and agreed to
§ Clause read a Second time, and added to the Bill.