§ Mr. Austin Mitchell
To ask the Chancellor of the Exchequer if he will make a statement on the reasons underlying the indexation of capital losses for capital gains tax purposes and the Government's purposes in abolishing it.
§ Mr. Dorrell
Indexation of losses has given rise to widespread tax avoidance, including the creation of artificial schemes which have created substantial allowable losses when no economic loss has been incurred. Unchecked, this abuse would have led to the loss of some £3 billion a year by the end of the decade. The current Finance Bill contains provisions which restrict indexation relief for capital losses.