§ Mr. BoothI beg to move amendment No. 78, in page 35, line 28, at end insert:
'(6) Notwithstanding any other provisions of this Act any tax losses which before the appointed day were available to the Corporation shall not for the purposes of the Taxes Acts be available to the successor company.'.The purpose of the amendment is to prevent the tax losses of the NFC being transferred to the successor company. In an earlier debate this afternoon I was told, I think by the hon. Member for Horsham and Crawley (Mr. Hordern), that the existence of the tax losses was evidence of the NFC's unprofitable operation in the past.I was assured by the Minister that all the subsidiary companies of the NFC now in operation are operating profitably, so I suggest to the House that there can be no possible justification for handing over the tax losses of the NFC to a successor company. By handing them over to a successor company to which the Government's securities will be sold we shall in effect be sanctioning the offsetting of tax liabilities by other people. I put it to hon. Members who are interested now, and might be interested in 12 hours' time in the special tax arrangements that we shall have over the period during which the Minister will be selling off this public asset, that if people are able, because they buy shares in the NFC, to acquire tax losses, they will be buying into a position in which they can avoid a tax liability that would normally be placed upon them as a result of other operations that they have carried on.
I remember being told by Conservative Members that people who evade taxes do not remove the need for taxes. They merely push the burden on to others. The Government are conniving at an arrangement whereby those people who purchase shares in the successor company to the NFC will be given, as a bonus, a duty of other people to pay the tax burden that they would otherwise normally have to pay. It is unjustifiable on any grounds of public propriety, or any reasonable financial basis, that those 1335 people who purchase shares when the NFC is transferred from a nationalised industry to a Companies Act company should have a special facility accorded to them that will not be accorded to anyone else in the country.
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They will be relieved of taxation as a result of a transaction to which they have made no contribution and to which the public has paid in the past in dealing with the losses that were made by the National Freight Corporation. I can see no reason why the public should be further disadvantaged by the Government passing on those tax losses.
§ Mr. FowlerThe amendment springs from a misconception that we thought we had cleared up in Committee. It seeks to withhold from the successor company any tax losses incurred by the NFC before the appointed day.
As we pointed out in Committee, tax losses made by NFC subsidiaries, principally National Carriers, can be set off only against future trading profits of the same business. Therefore, there is no way in which another company can buy a controlling interest in the successor company and in some way use the NFC's past tax losses to offset future profits in another subsidiary or another part of the business. Those tax losses cannot, therefore, be considered as some sort of asset that a purchaser might wish to acquire so as to avoid paying taxes on his other businesses.
If the amendment were accepted, it would create a positive tax disadvantage for subsidiaries of the successor company that would not otherwise exist. If the amendment were to become effective, companies such as National Carriers would not be able to set off past tax losses against future trading profits. Their competitiveness would suffer, and prospects for both companies involved and their employees would be severely worsened. I cannot believe that Labour Members wish that to happen. I am prepared to talk further with them, but I should have thought that at this stage they might wish to ask leave to withdraw their amendment.
§ Amendment negatived.