§ 12. Mr. MacGregorasked the Chancellor of the Exchequer what level for the composite rate of tax in the current year he is proposing to the building societies.
§ Mr. Denzil DaviesThe composite rate of tax for the current year finally proposed to the building societies will depend on the results of the investigation currently being made into the tax liability of building society investors.
§ Mr. MacGregorWill the hon. Gentleman confirm that the level of the composite rate that the building societies will have to pay is likely to be higher this year? Will he consider varying the composite rate and using it as a regulator, either if the flow of savings to the societies moves sharply downwards or if interest rates generally move upwards, with implications for the rate of mortgage interest that ordinary mortgagors have to pay?
§ Mr. DaviesI have no idea whether the composite rate will be higher or lower. The rate is determined after discussions with the Building Societies Association after taking account of tax allowances and the level of income. It is not possible to say what the rate will be. The answer to the second part of the question is "No". That would not be the right way to help people who want to borrow money to buy houses. There are other ways in which one could subsidise house purchase. The hon. Gentleman's suggestion would not be the right way of doing so, because it would impose a burden on other taxpayers, who would have to pay more tax.
§ Mr. HoramThere is general dissatisfaction with the behaviour of building societies, particularly over lending on older property. Will my hon. Friend ensure that that sort of point is seriously taken up with the societies in any negotiations?
§ Mr. DaviesThe question of lending on older property is a matter for my right hon. Friend the Minister for Housing and Construction.
The general question of the composite rate has nothing to do with the lending of money to mortgagors; it is concerned with the tax liability of depositors with building societies.