It has been suggested in some quarters that these remissions on Surtax should be accompanied by a capital gains tax. I have carefully examined this possibility. From a practical point of view, the complication of the legislation and the administrative machine required present difficulties. Also, the allowance for losses and the many exemptions which would, in my view, be required would reduce the proceeds to very much smaller proportions than publicly estimated. I am, therefore, not proposing a capital gains tax in my Budget.
Of course, individuals or firms, who make a business of seeking capital gains on the Stock Exchange or in property or other deals, are, in fact, trading and are liable to the full rates of Income Tax, Surtax or Profits Tax on the profits from such activities. This is the law. People who are genuinely investing come into a different category. On which side of the line particular cases fall is a matter not for me or the Board of Inland Revenue, but is a matter to be decided by independent Commissioners of Taxes and the courts. This aspect of the matter has been looked at by both Royal Commissions, that is to say, in 1920 and 1955. 822 I propose to look at it myself again during the coming year. But I am not at present satisfied that what is called a capital gains tax is worth while.