§ Mr. R. H. Turton (Thirsk and Malton)
I beg to move Amendment No. 327, Clause 60, in page 126, line 36, to leave out from "profits" to the end of line 41.
I moved a similar Amendment in Committee, and the Financial Secretary gave an assurance that he would look at the matter again because of certain peculiarities in this paragraph. There are two points here, one of form and one of content.
As we were told by the hon. and learned Gentleman in Committee, the ending of unilateral relief purposed by the paragraph will not have statutory effect in itself. It will require another Act of Parliament before it can take effect. No doubt, there are precedents for such a course, but I put it to the House that that is an undesirable way of proceeding in a Finance Bill. We should not bind a succeeding Parliament or bind this Parlia- 112 ment in a succeeding Session. So much for the form.
On the content, the argument is much stronger. This unilateral relief for Commonwealth countries was instituted in 1950 to help the young developing countries which could not afford to give double taxation relief. Two countries specially concerned with this form of unilateral relief are India and Pakistan. Both of them are at present suffering a good deal from the great division between the rich and the poor countries. It is, therefore, unwise and unhelpful to put in an exhortatory or cautionary paragraph which has no statutory effect and which will not help India and Pakistan. Moreover, it comes at a time when even America, which is being very stern in cutting down its overseas investment, has given preferential treatment for the developing countries.
Is this paragraph really necessary? The Government give a warning that they intend at some future date to end unilateral Commonwealth relief. I hope that, when that purpose is brought forward in proper operative form, it will be opposed by hon. Members who want to see more preferential help given to the young developing countries. This is a matter of policy not of one party or another but of both sides of the House. We ought to seek ways of giving preferential treatment to the developing countries.
There is another argument of some importance here. The paragraph deals with Section 36 of the 1950 Act, which was later embodied in the Income Tax Act, 1952. That Section 36 was put in by Sir Stafford Cripps, then Chancellor of the Exchequer, because of his great interest in the developing countries. It would be a very sad reflection on the present Government if, by their second Finance Bill, they sought to repeal in this ineffective way those provisions which Sir Stafford Cripps made in 1950.
For these reasons, I hope that the Government will, on reflection, agree to delete the paragraph.
§ 7.30 p.m.
§ The Financial Secretary to the Treasury (Mr. Niall MacDermot)
In moving the Amendment, the right hon. Member for Thirsk and Malton (Mr. Turton) said that it raises two questions, one of form 113 and one of content. Both were discussed at some length in Committee. As to the question of content, I have very little to add to what I said in Committee. I gave the reason then why the Government found ii necessary to give notice—and to give notice in the most formal way possible—of the intention at some future date to be determined later to withdraw the unilateral relief now given for underlying tax on investment in the Commonwealth.
The reason is that it has always been the principle that reliefs which we grant unilaterally within the Commonwealth are reliefs which we are prepared to negotiate on a reciprocal basis with other countries. For reasons which we have exhaustively considered and discussed, we have made it clear that we are not prepared to take that standpoint in future negotiations with other countries. Accordingly, it would not be right for us to continue the unilateral relief in favour of the Commonwealth.
Hon. Members will remember that in Committee I was slightly taken by surprise on the question of form. I struggled as best I could and I think that in the end, if I may so without immodesty, I produced what were the right answers, which are that it is highly desirable to give notice in the most formal way possible since it is the intention that businessmen shall make their decisions in the knowledge of what the Government's intention is, and there is no more solemn way in which that intention can be declared than by writing it into an Act of Parliament.
Of course, hon. Gentlemen opposite are right in saying that we cannot bind a future Parliament and that it must be left to a future Parliament to decide. It is not unusual in a matter of this kind where a decision has been taken and only the date has to be determined later for that date to be decided later by subordinate legislation with an affirmative or negative Resolution of the House, again leaving the decision to the House on a future occasion.
But the supplementary answer that I can give now, which I could not give at the time, is that the reason why that was not chosen on this occasion, and, indeed, is not chosen generally in Finance Bills, is that Finance Bills come up every year and unless it is thought that the date will be in the very near future, within 114 the coming year, there will be plenty of future opportunities for Parliament to consider it.
There are precedents for it in Part IV of the Finance Act, 1944, which dealt with the question of allowances for expenditure on scientific research, which was introduced as from a future date to be determined by Parliament. Again, there was the Income Tax Act, 1945—the matter was very similar to the question with which we are dealing—which introduced the post-war system of initial and annual allowances, and, as it were, notice was given to the business community of this change of policy with the intention that it should act upon it even though it was left to some future Finance Bill to determine what should be the date of introduction.
In case anyone should say that those precedents are rather hoary or due to wartime circumstances, I remind the House of the Town and Country Planning Act, 1953, Section 2 of which, in a slightly different field, abolished the payments for the depreciation of land values, but it provided that claims for payments under the Act might be satisfied.in such manner, in such cases, to such extent, at such times and with such interest as may hereafter be determined by Act of Parliament passed for that purpose.I hope, therefore, that what we have done here has the respectability of precedent as well as the arguments of good sense which have already been put to the House.
§ Sir Edward Boyle (Birmingham, Handsworth)
I am glad that we have returned to this matter. I am sure that the House is grateful to the Financial Secretary for having explained, on reflection, the point of the form of the Amendment. When explaining the form of the Amendment, he gave examples from the Finance Bills of 1944 and 1945. I was interested that, when giving those examples, he quoted the case of the postwar system of initial allowances. When the late Mr. Hugh Gaitskell, as Chancellor of the Exchequer, gave notice of the suspension of the initial allowances in 1951, he used a very different procedure from this. On that occasion he took power in the Clause to suspend the initial allowance in a year's time.
Frankly, I rather agree with my right hon. Friend the Member for Thirsk and 115 Malton (Mr. Turton) that since this procedure and this sort of drafting have not been used in a Finance Bill now for about 20 years, I rather regret it. And I do not think that businessmen ought to assume as a matter of course that we shall take the step envisaged in the Clause. I want to make absolutely plain that my hon. Friends and I will not regard ourselves as bound by this Clause if we become the Government by the time the next Finance Bill is passed. Equally, I am not giving any pledge as to what we shall do. I am merely pointing out that I feel that this is a matter to which the House may well have to return on a future occasion before taking a final decision.
I am sure that my right hon. Friend has been right to pinpoint this subject both in Committee and on Report. From the point of view of the substance of the matter, he is surely justified in pointing out that Section 348 of the Income Tax Act, 1952, the consolidation Measure, was re-enacting a Clause dating from the time of Sir Stafford Cripps. As my right hon. Friend pointed out when we were discussing this matter previously, there was here a very strong case for this unilateral relief bearing in mind the particular cases of India and Pakistan, to whom we could not give double taxation relief because of the weakness of their economies.
It would be quite a serious matter finally to decide to withdraw the unilateral relief which has been operating during this period. I recognise—the Financial Secretary told us this last time—that there is a considerable amount of money at stake here. I recognise, also, his point that we do not at present grant any concession unilaterally within the Commonwealth which we are not prepared to offer to other countries reciprocally in a double taxation agreement. Remembering the number of past Finance Bills in which, when we were the Government, we were chastised by the present Prime Minister for not being sufficiently enthusiastic about the sterling area as a discriminatory trading bloc, I find it a little ironic that the Financial Secretary should have to rely so much on that argument today.
While, in view of the money involved, I do not think that I could advise my hon. Friends to carry this matter to a Division 116 now, none the less I should like to make it perfectly plain that we on this side could not give any pledge that this notice is to be operated, and this unilateral relief finally withdrawn, should we become the Government.
§ Mr. Turton
In view of the assurance given by my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle), that he will not use this paragraph to harm India and Pakistan when we are in power, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.