HC Deb 19 January 1965 vol 705 cc9-12
11. Mr. Ridsdale

asked the Chancellor of the Exchequer whether he will give further information on the proposed capital gains tax as it applies to gilt-edged investments.

15 and 16. Mr. Charles Morrison

asked the Chancellor of the Exchequer (1) whether transactions in agricultural land will be subject to the proposed capital gains tax;

(2) what provision he intends to make for the avoidance of tax liability on apparent capital gains on agricultural land arising from a fall in the purchasing value of the £ sterling.

17. Mr. Geoffrey Lloyd

asked the Chancellor of the Exchequer whether he will give further guidance to those companies which, by reason of the date of their financial year, have already begun to incur liability to the proposed corporation tax.

24. Mr. Ian Gilmour

asked the Chancellor of the Exchequer if he will exclude from the scope of his proposed capital gains tax owner-occupied retail shop property.

25. Mr. Channon

asked the Chancellor of the Exchequer if he will, in order to allay doubts, lay a White Paper to explain in detail his proposals for a corporation tax and a capital gains tax.

31. Sir J. Rodgers

asked the Chancellor of the Exchequer if forestry undertakings will be exempted from the proposed capital gains tax.

35. Sir J. Barlow

asked the Chancellor of the Exchequer to what extent overseas trade corporations and their shareholders are affected by his recent announcement on the proposed corporation tax.

40. Mr. John Hall

asked the Chancellor of the Exchequer if he is aware that an increasing number of companies are postponing their plans for industrial expansion because of the uncertainty about the effect of the proposed corporation and capital gains taxes; and if he will make a further statement clarifying the issues still in doubt.

55. Sir C. Taylor

asked the Chancellor of the Exchequer whether the provisions requiring companies to deduct income tax at the standard rate from dividends and other distributions of profits after 5th April, 1966, will apply to such distributions from capital sources.

Mr. Callaghan

I must ask hon. and right hon. Gentleman to await my legislative proposals which will be introduced in due course.

Mr. Ridsdale

Will the right hon. Gentleman state his reasons for extending the capital gains tax to gilt-edged investment? Surely there is a case for exempting from this tax elderly people with small fixed incomes, particularly as some of these people may have to sell in order to pay for the rising price of Socialism?

Mr. Callaghan

There will be a number of opportunities to debate this matter in due course.

Mr. Ian Gilmour

May I remind the right hon. Gentleman that, in view of the great new development programmes in property at the moment, unless he exempts owner-occupied retail shops he will cause grave and unnecessary hardship to a very deserving class of people?

Mr. Callaghan

One of the advantages of the hon. Gentleman's Question is that I am now able to consider this matter.

Mr. Charles Morrison

Is the Chancellor aware that many farms change hands because of compulsory purchase? When considering his capital gains tax, will he bear that in mind so that farmers will not suffer tax disadvantage as the result of being dispossessed compulsorily?

Mr. Callaghan

I will certainly consider that point.

Sir J. Rodgers

Has the right hon. Gentleman invited representations, in considering his tax proposals, from those responsible for reafforestation? Will he bear in mind that timber and wood pulp are amongst our largest imports but that experts believe that, by the year 2,000, such material will be unavailable from North America, which will need it for its own industrial purposes? Should not tax relief be given for reafforestation in this country? Are not people engaged in this occupation as valuable to our community as exporters?

Mr. Callaghan

The hon. Gentleman will remember that I invited all interests to make representations. I cannot recall any from forestry interests but I will certainly take note of what he has said.

Mr. William Clark

Is the right hon. Gentleman aware that the uncertainty caused by his proposals is creating havoc not only in the City but among savers generally? If we want to modernise Britain, does the Chancellor think there would be any sense in taxing a notional profit on the sale of a factory on moving to a new factory? Would that lead to modernisation or would it militate against it? Surely it would mean that industrialists would prefer to stay in factories which should be modernized.

Mr. Callaghan

It is ridiculous of the hon. Gentleman to talk about havoc being created, except on the benches opposite. Business is going on perfectly well and investment is keeping up at a high level. Such panic as there was existed only in the imagination of certain people. The hon. Gentleman would be well advised to await the legislation and see what proposals we put forward. He gets no further by putting down this sort of Question, to which I cannot yet give an answer, but I will do so when the legislation is introduced.

Sir H. Legge-Bourke

Even if the right hon. Gentleman cannot give an answer over the whole field, would he not agree that it is extremely important that the National Savings Movement should not be adversely affected by uncertainty? Is he aware that the 5 per cent. Development Bonds have a built-in gain of 2 per cent. over five years and that there are other savings exercises of a similar nature? Will he agree that it is important that the potential saver should know whether his capital gain will be taxed?

Mr. Callaghan

The hon. Gentleman will remember that in my statement of 8th December I made certain exemptions for National Savings. Of course it is important that people should know what their liabilities are, and they will know.

Sir R. Thompson

Does not the right hon. Gentleman agree that if he levies a capital gains tax on Government securities held to redemption, he will be defaulting on a statutory obligation?

Mr. Callaghan

That seems to be a matter of opinion which, no doubt, will be debated.

Mr. Maudling

Arising out of an earlier answer, will the right hon. Gentleman not underestimate the effects of his announcements upon investment, both domestic and external?

Mr. Callaghan

I was very interested to see a recent survey which showed that private manufacturing investment this year was expected to be as high as it was last year.