§ 4. Mr. Frank Allaun
asked the Chancellor of the Exchequer if he will take steps to end the avoidance of capital gains and income tax by property companies which do not sell their properties but retain them in their accounts at the purchase price despite an increase of market value, by requiring periodic revaluation of such assets for tax purposes.
§ The Chief Secretary to the Treasury (Mr. Tom Boardman)
There is no question of tax avoidance in the circumstances described. However, the charge to tax on first letting which was announced on 17th December will ensure that the unrealised gains of property companies following 894 material development are largely brought into charge to tax.
§ Mr. Allaun
Is the Minister aware that the net assets of Land Securities Investment Trust alone increased in a single year by £368 million, on which it paid £2 million corporation tax? Is it not a fact that since the Chancellor's announcement last month property shares have actually risen on the Stock Exchange and that vast capital gains of that kind on properties already let—vast capital gains at the expense of the community—will not be subject to tax in any way?
§ Mr. Boardman
When the hon. Gentleman talks about shares in property companies, he should realise that a large proportion of them are held by small shareholders, pension trusts and the like. For example, £150 million of new money from pension trusts went into properties last year. When they are sold, the shares in those companies attract capital gains tax. The hon. Gentleman should also realise that taxation of unrealised capital gains would be a fundamental departure from the principle which successive Governments have followed. But my right hon. Friend the Chancellor has brought in unrealised gains to the extent of first letting.
§ Mr. Clinton Davis
Is the Minister aware that in my constituency thousands of pensioners and widows are weeping because of what he has said? Is he not aware that in that part of industry the only real productivity drive is in the tax mitigation or avoidance business and that a lot of useless man-hours are spent in defrauding the Government of the revenue to which they are entitled?
§ Mr. Boardman
The pensioners in the hon. Gentleman's constituency would no doubt be concerned about the consequences if the Labour Party returned to power, in view of the comparison of its pension record with that of the Conservative Government. As to tax avoidance, we are no less interested than the Opposition in stopping any form of tax fraud. We are all bent on the same endeavour. If there are cases of tax fraud of that kind, we shall certainly seek to stop them.