HC Deb 27 July 1971 vol 822 cc192-3
10. Mr. Evelyn King

asked the Chancellor of the Exchequer if he will seek to abolish capital gains tax.

Mr. Maurice Macmillan

No, Sir.

Mr. King

Irrespective of whether or not the tax is equitable, is not the primary effect to inhibit anybody selling anything and to prevent investment switching? In the long term does not this have disastrous effects on investment and the economy?

Mr. Macmillan

I remind my hon. Friend that we have never rejected capital gains tax in principle, but we have always thought it had a number of defects. This year's Finance Bill includes methods of removing three of them. My right hon. Friend has made clear that we are continuing to study capital gains tax. We shall take note of the point made by my hon. Friend.

Mr. Robert Cooke

Will my hon. Friend look at the cost of the collection/ yield ratio when considering capital gains tax on tangible moveable property? Will he also bear in mind the anomaly that under this part of the tax system one can be taxed even if one gives an asset to the nation?

Sir G. Nabarro

And even if one is burgled.

Mr. Macmillan

My hon. Friend has made that point in different circumstances, but I will bear it in mind.

Mr. Boyd-Carpenter

Will my hon. Friend also consider that aspect of tax under which liability arises where there has been an increase in money value but no increase in the real value of the asset?

Mr. Macmillan

Yes. I think that the point made by my right hon. Friend about taxation versus inflation should be carefully considered.