Land and Property Development

HC Deb 17 January 1974 vol 867 cc894-6

5. Mr. Horam

asked the Chancellor of the Exchequer if he will now propose fiscal measures to deal with the profits being made in land and property development.

Mr. Tom Boardman

I would refer the hon. Member to my right hon. Friend's statement on 17th December 1973 and to the statement by my right hon. and learned Friend the Secretary of State for the Environment on 21st December.

Mr. Horam

I repeat, will the Government now propose measures which deal properly with the vast profits which have been made in land and in property? When shall we have a tax on unrealisedgains? Every commentator on the Government's measures asked when we should have a tax which taxed property more than industry, instead of at the same level. When shall we have a tax which makes the property companies pay tax on the money they borrow from the banks? Even that would be something.

Mr. Boardman

Property companies are taxed first in the ordinary way upon their dealings in property. They are taxed on their realised capital gains. My right hon. Friend the Chancellor has introduced an additional tax which can involve an increase in tax liability of up to 75 per cent. on individuals and a considerably bigger burden upon the shareholders of certain companies. Therefore, we have a system of taxation which catches the capital windfall gains which the hon. Gentleman no doubt finds offensive and which we, too, have found offensive.

Mr. Joel Barnett

Is the Minister saying that he is not too worried about the effect upon pension funds of the other policies?

Mr. Boardman

The question of pension funds arose on the question of the taxation of unrealised gains, which are not qualified as a disposal either by the sale of the asset or by the measure that my right hon. Friend has introduced of the disposal created by a first letting. The point that the hon. Gentleman should recognise is that the taxation of property, which seems to be the wish of Opposition Members, with the aim of catching everyone who invests in property, would catch very heavily a very large number of pension funds. The hon. Gentleman seems to be bent on the assumption that properties are owned by one or two rich individuals. Property is an investment the benefits of which are shared over a very wide section of the community.