CAPITAL GAINS TAX (Hansard, 10 June 1974)

§ Mr. Terence Higgins (Worthing)
I presume that this is a paving amendment 1370 for a Government amendment which will appear at a subsequent stage, but I should be grateful if the Financial Secretary would be courteous enough to give an explanation.

§ The Financial Secretary to the Treasury (Dr. John Gilbert)
I was not quite sure when I had to rise to my feet. I had intended no discourtesy to the hon. Member for Worthing (Mr. Higgins), as I am sure he recognises.
The resolution authorises an increase in the rate of capital gains tax payable by certain unauthorised unit trusts and by common investment funds for funds in court. The rate is at present 15 per cent.; for 1974–75 it is to be 16 ½ per cent. The need for the motion results 1371 from an oversight when the Bill was published, for which I apologise.
Capital gains tax rates are like income tax rates in so far as they are fixed in advance. Accordingly, it is necessary to fix the rate for these analogous funds in this year's Finance Bill. The need to increase the present rate of 15 per cent, to 16 ½ per cent. arises as a result of the increase in the basic rate of income tax from 30 per cent. to 33 per cent.
If there are any other points the hon. Gentleman would like to raise, I shall do my best to answer them.

§ Mr. Higgins
I understood from what the hon. Gentleman said that the motion was related to a clause in the Finance Bill for which no Ways and Means Resolution had previously been passed, although it should have been moved. Which clause is covered by the motion?

§ Dr. Gilbert
I am informed that a new clause will be tabled in due course, which will show the hon. Gentleman why we are introducing the motion now.

§ Mr. Higgins
With great respect to the hon. Gentleman, that is not good enough. First, the hon. Gentleman tells us that the motion is moved now because there had been an oversight, the clear implication being that it was something in the Finance Bill already. When I pressed him he said that there was a new clause to be considered in Committee upstairs. He cannot have it both ways. I hope that the hon. Gentleman will give rather more convincing explanations on what is a fairly simple matter.

§ Dr. Gilbert
There is a misunderstanding here. Before one can introduce a new clause one must have a motion. The motion is being moved now, and the new clause will be introduced later.

§ Mr. Higgins
The hon. Gentleman's first explanation was that this was a Ways and Means motion which was tabled because of an oversight—that it should have been tabled before and was not. If it is to cover a new clause to be introduced in Committee upstairs, there is no reason why it should not be tabled at that stage. That would be perfectly reasonable, in which case there is no oversight. What I find difficulty in understanding is why the hon. Gentleman thought that there had been an oversight on something to 1372 be done in Committee upstairs on a future occasion.

§ Dr. Gilbert
I do not wish to be discourteous to the hon. Gentleman. I thought that I made it clear that the oversight was that the new clause itself had not been tabled, and, therefore, the motion is needed. We are chasing our own tails here. I made it clear that it was an oversight, for which I apologised. I cannot see that it is in any way inconvenient to the House to deal with the matter now. What I said could not be more open.

§ Mr. Higgins
I now understand what the hon. Gentleman is saying—that both the new clause and the Ways and Means motion were an oversight. If that is so, of course the House will gladly accept it. But we are still put in a rather odd position, finding ourselves with both a new clause and the motion, which has not been mentioned before, without the hon. Gentleman giving a full explanation. But I am grateful for what the hon. Gentleman has now said.