HC Deb 22 February 1973 vol 851 cc670-1
14. Mr. David James

asked the Chancellor of the Exchequer whether he will consider exempting the capital as well as the interest component of house mortgage repayments from the burden of income tax.

Mr. Nott

No, Sir.

Mr. James

Does my hon. Friend not recognise that, owing to the inflated price of housing, any young married couple earning between £40 and £50 a week may be paying up to 50 per cent. of their gross income in mortgage repayments and tax, before they are allowed to live at all? Does he not believe that the concession which I have proposed would stimulate house ownership and thereby stimulate house building?

Mr. Nott

Income tax is a tax on income, and relief can be given only for income expenditure. Under my hon. Friend's proposal, I am afraid that the wealthy could create tax relief and make virtually unlimited profit at the expense of the Inland Revenue. My hon. Friend should look to Cmnd. 5205, which emphasises that the Government intend to bring forward proposals which will increase the availability of building land and reduce the extent to which it is possible for people to make disproportionately high profits from transactions in land. This is the way to stabilise house prices and make more houses available.

Mr. George Cunningham

Does the Minister accept that at the moment it is possible for the wealthy to make considerable profits out of loopholes in the taxation system? Since the payment of rent is logically exactly equivalent to the payment of interest, why should there not be permission to offset rent against taxable income, in the same way as interest payments?

Mr. Nott

I am sorry, but I see no similarity between the payment of interest and the payment of rent. They are two entirely different things.

Mr. Joel Barnett

Will the Minister not point out that not only is his hon. Friend's suggestion absurd but the Chancellor's taxation policies are equally absurd, if he is to have the slightest chance of making a voluntary policy work, which is essential now that his statutory policy has so utterly failed?

Mr. Nott

We are discussing mortgage relief, which was available under the hon. Gentleman's Government. We have not changed the rules in this area at all.