§ 2. Mr. Heddleasked the Chancellor of the Exchequer if he will state (a) the amount of tax revenue from development land tax and (b) the cost of collection thereof for the year 1983–84.
§ The Economic Secretary to the Treasury (Mr. Ian Stewart)In 1983–84 the amount of tax revenue front development land tax was £67.9 million and the cost of collecting the tax is estimated at around £5 million.
§ Mr. HeddleNotwithstanding the considerable reduction in the rate of the tax four years ago from 80 to 60 per cent., does my hon. Friend agree that it is still significantly above the level of corporation tax? Will he give further consideration to treating land held by builders as stock-in-trade?
§ Mr. StewartI am glad that my hon. Friend welcomes the improvements in development land tax that we have made since 1979 and the reduction of the rate at which the tax is charged. Land held for development is not treated as a trading asset because the gains arise from planning permission not from trading purposes. However, I shall reflect on what my hon. Friend has said.
§ Sir William ClarkDoes my hon. Friend accept that development land tax collection charges are fairly high at over 7 per cent.? Does he further accept that in some instances the imposition of the tax is an inhibiting factor on development? Would it not be better to abolish the tax and to allow any profit to be subjected to ordinary capital gains taxation?
§ Mr. StewartThe cost of collecting the tax has been falling. The yield has risen over the past four years, but collection costs have not. I cannot encourage my hon. Friend to think that it would be proper to bring development gains under capital tax, any more than to make them a corporation tax charge.