§ Sir William Clark
I beg to move amendment No. 38, in page 157, line 20, column 3, leave out figures to line 32 and insert—
This is the last amendment to be moved tonight. At this late hour brief speeches are probably in order. However, if I make a brief speech, I hope that my hon. Friend and the Patronage Secretary will not think that it diminishes the validity of my argument. Since the Conservative Party came to office, the totality of capital taxes has increased. Indeed, my hon. Friend the Financial Secretary was gracious enough to acknowledge that. There have been improvements in the thresholds for capital transfer tax, but I cannot understand why, under the Bill, the rate for the lifetime transfer is half that of the death transfer, but only part of the way.
'Nil 15 17½ 20 22½ 25 27½ 30 32½ 35 37½'
If the transfer is made during the donor's lifetime, my amendment will mean half the death rate all the way through. I cannot see why, after £200,000, the rate does not go down, for example, to 27½ per cent. In the Bill it is set at 30 per cent., 35 per cent., 40 per cent., and so on. I should like an explanation of why this year my hon. Friend the Financial Secretary and my right hon. and learned Friend the Chancellor saw fit only to halve the lifetime transfer rate, as compared with the death rate, for part of the way. There must be a reason. Is my right hon. and learned Friend the Chancellor doing it half this year and half next year? I look forward to hearing my hon. Friend's answer.
§ Mr. Ridley
My hon. Friend's amendment would have the effect of making the lifetime transfer rate exactly half that of the death rate all the way up the scale. It would 822 begin to bite only at the level of £200,000, where it would part company with the present rates and begin on large estates above £200,000.
I cannot argue against the amendment on grounds of cost. To accept the amendment would cost only a couple of million pounds. It is hard to say when that would begin to come through as there are few people at that level who will be subject to the tax in any one year. It is a question of judgment. My right hon. and learned Friend suggested recasting the lifetime gift scale in the previous Budget, and all that has happened is that the bands have been, as it were, moved upwards. The shape and structure derives from last year.
The effect of the amendment on an estate of £1 million would, as drafted in the Bill, be £325,000 of tax payable. The amendment would reduce that still further to £277,500. As I said earlier to the hon. Member for Come Valley (Mr. Wainwright), our judgment is that we should shade the rate more in favour of lifetime transfers and smaller estates. This is a lifetime transfer on a larger estate.
I do not claim that our judgment is necessarily better than that of my hon. Friend. My right hon. and learned Friend thinks that he has got it just about right, but we will reconsider the scale next year to ascertain whether an alteration is needed. We shall bear in mind my hon. Friend's point on this feature of the scale in the hope that we can convince him jointly and mutually that we are right.
§ Sir William Clark
I thank my hon. Friend for his reply. If the lifetime rate were to be halved, even on the higher value estates, that would accelerate the payment of CTT to the Revenue and it is possible that there would be more transfers during the lifetime of the larger estates. However, in view of my hon. Friend's remarks, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Schedule 10 agreed to.
§ To report Progress and ask leave to sit again.—[Mr. Lang.]
§ Committee report Progress; to sit again tomorrow.