HC Deb 02 August 1962 vol 664 cc765-8
4. Mr. David James

asked the Chancellor of the Exchequer, if he will take steps to bring within the ambit of the short-term capital gains tax the net proceeds of political libel actions.

Mr. Barber

No, Sir.

Mr. James

Has my hon. Friend noticed that political libel actions seem to be increasing in volume all the time and that this must reduce the cut and thrust of politics? Furthermore, has he noticed that sometimes these actions appear to be distinctly speculative in their nature, and has he also noticed that the apparent damage, so far as the courts are concerned, of a chance adjective which is forgotten within a week, if it is ever read at all, appears frequently to be more than double the damage to anyone who suffers a permanent change of character as a result of a motor car accident? In the light of this proposition, will my hon. Friend look at this matter again?

Mr. Barber

The points made by my hon. Friend may or may not be with merit, but what he is suggesting is that his reputation should be treated as a chargeable asset liable to tax in the event of its disposal within six months of its acquisition. I think this is a somewhat difficult concept to grasp.

6. Mr. Tapsell

asked the Chancellor of the Exchequer if he is aware of the decline in the volume of business on stock exchanges throughout the country since the introduction of a capital gains tax in its present form; and what is his estimate of the consequential loss of revenue from Stamp Duty in the present financial year.

Mr. Barber

Fluctuations in stock exchange business can be due to many causes. It is too early to estimate the effects of the short-term-gains tax.

Mr. Tapsell

While accepting what my hon. Friend has said, that a number of political and economic factors have had an influence on this, will he not agree that all those who are in the best position to judge believe that the short-term capital gains tax has had a very substantial influence on the declining volume of business on the stock exchange? Is it not a fact that when potential investors know that they may have to pay away in tax almost 90 per cent. of any profit they may get, this does not merely tax capital gains, which I for one accept, but deters people from investing at all? Will he ask his right hon. Friend to keep this tax under review during the coming year with a view possibly to replacing the present arrangement by a flat-rate gains tax in the next Finance Bill?

Mr. Barber

I am not sure that I would accept unreservedly all that my hon. Friend has said, because one would expect, in any event, a decline in business at this time of the year. There was a similar decline last year. Some stockbrokers have for a number of years given the advice "Sell in May and go away." Apart from that, I am sure my right hon. Friend will review all aspects of taxation in the course of the coming year.

Mr. Callaghan

Surely the Financial Secretary will not endeavour to change the system if the result of it has been to deter speculative transactions? Was that not part of the object of the exercise?

Mr. Barber

I do not think it would be fair to say that the primary object of the legislation was to deter speculative transactions. The object was to levy tax on transactions of a speculative nature which my right hon. Friend thought it was reasonable to do. We will certainly bear in mind all these matters in the coming year.

7. Mr. Tapsell

asked the Chancellor of the Exchequer whether he is yet in a position to estimate the revenue from the capital gains tax on transactions in stocks and shares in the present financial year.

Mr. Barber

I would refer my hon. Friend to the reply given by my hon. Friend the Economic Secretary on 26th July.

Mr. Tapsell

Is it not unusual for a major change in tax policy, and indeed a major tax innovation which many of our supporters in the country regard as contrary to Conservative principles, to be introduced without any estimate being made at all as to the likely tax yield?

Mr. Barber

My right hon. Friend explained at some length in the course of our debate on the Finance Bill why it was not possible to make an estimate of the yield of this tax. As to the current year, to which my hon. Friend refers in his Question, he will, I am sure, appreciate that no assessments can be made until the returns showing the gains have been received, and those returns will not be due to be made until after the end of the current financial year. This is the reason why there will be no yield this year.

Mr. Houghton

Can the hon. Gentleman say whether anyone has yet offered to pay?

Mr. Barber

I do not think they have yet been asked.

Mr. Tapsell

If the loss or reduction in yield from Stamp Duty exceeds, as is possible, the actual yield from the capital gains tax, will not the whole community suffer as a result?

Mr. Speaker

The question is hypothetical and, therefore, out of order.