§ 9. Mr. Wattsasked the Chancellor of the Exchequer whether he is aware of the unusually heavy taxation which is likely to be levied on United Kingdom shareholders in the Suez Canal Company as a result of having received a capital compensatory grant; and whether he will take steps to relieve them of this exceptional charge.
§ Sir E. BoyleThe Inland Revenue has been advised that what the shareholders receive is, in law, income, and not captial. As such, it is taxable in the same way as other income. My right hon. Friend does not think that any special relief would be justified.
§ Mr. WattsDoes the Financial Secretary realise that the public consider this 551 as capital, and that it is a monstrous injustice that compensation given to people who have lost money in this way should be taxed?
§ Sir E. BoyleI know of the concern of my hon. Friend and of many other hon. Members on this subject. The situation is, as I think my hon. Friend knows, that the distributions are not described as repayments of share capital, because the nominal value of the shares remains the same after distributions have been made, and the Inland Revenue has been advised that, in those circumstances, the distributions are taxable income in the hands of shareholders resident in this country. The question of exempting these distributions either by extra-statutory concession or by legislation was fully considered. I believe that the right decision has been taken but, of course, I note my hon. Friend's views.
Dr. GlynIs my hon. Friend aware that in France this repayment, which is, in principle, a repayment of capital, is regarded as such, and is not subject to Income Tax? I agree that it is extremely unfair that the shareholders of this company, who have already suffered very considerably, should have insult added to injury by taxation on a capital gain.
§ Sir E. BoyleI do not think that I can add to the Answer—which, I am sorry, may have seemed overlong—that I gave just now.