HC Deb 09 July 1985 vol 82 cc1052-3

'In subsection (5) of section 47 of the Finance Act 1973 for the words "stamp duty of £1" there shall be substituted the words "stamp duty of NIL".'.—[Mr. Neil Hamilton.]

Brought up, and read the First time.

Mr. Neil Hamilton

I beg to move, That the clause be read a Second time.

The new clause is in my name and in that of my hon. Friend the Member for Croydon, South (Sir W. Clark), who has sensibly departed. Its purpose is simple, and I promise to detain the House for no more than one minute. It eliminates capital duty, which is a form of stamp duty, now governed by European law. It is imposed on new share capital on the formation of a company or on later increases in its issued share capital.

United Kingdom business and its counterparts in Europe have been urging the abolition of that duty for some time, because it is an impediment to the growth of business. Although the Government support that aim, they argued that they were constrained by EC rules and were, therefore, unable to accede to requests to abolish the duty. However, on 10 June this year, at the Internal Market Council a directive was adopted allowing member states to fix the level of duty at between zero and 1 per cent. At present, in British law, it is a compulsory 1 per cent. Therefore, member states which wish to abolish the duty completely are authorised to do so. I hope that my hon. Friend the Economic Secretary can confirm that the Government will now act to abolish the duty.

Mr. Ian Stewart

My hon. Friend the Member for Tatton (Mr. Hamilton) was right to draw attention to the position under the new directive on stamp duty, but I am sure that neither he nor any other hon. Member would expect me on the Government's behalf to accept on Report a new clause with a cost of £80 million or more—five or more times the cost of the stamp duty package that we debated earlier. Any decision on the future of the tax would only be taken in the context of budgetary considerations. The case for a reduction in or abolition of the rate of duty would have to be considered alongside any other tax reduction proposals as a matter of priority.

My hon. Friend has performed a useful service in drawing our attention to the fact that there is stamp duty on capital raising and that there are arguments for suggesting that it may be an impediment. No doubt, this is a matter of which we should take account at a suitable occasion in the future.

Mr. Terry Davis

The amount of stamp duty may be regarded as an "impediment" on raising money through the market, but it can be argued also that fees charged by accountants, lawyers, merchants and other who take part in a share issue—

Mr. Neil Hamilton

They provide a service.

Mr. Davis

Those charges can also be regarded as an impediment to raising money through the market. I do not expect the hon. Member for Tatton (Mr. Hamilton) to agree with me—he is in favour of those people; we are not.

Mr. Hamilton

By leave of the House, I do not propose to rise to the bait offered by the hon. Member for Birmingham, Hodge Hill (Mr. Davis). Having heard what my hon. Friend the Economic Secretary said, I hope that we shall return to this matter on another occasion. I therefore ask leave of the House to withdraw the motion.

Motion and clause, by leave, withdrawn.

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