54. Mr. Smithersasked the Chancellor of the Exchequer whether he is aware that tax concessions made by colonial Governments with a view to encouraging the establishment of new industries are being nullified by the operation of United Kingdom double taxation agreements; and whether he will take steps to prevent this.
Mr. ButlerI am aware of the point with which my hon. Friend is concerned, but I cannot accept that the operation of United Kingdom double taxation agreements is to blame. Under these agreements, which have done much to foster development in the Colonies, the United Kingdom tax bill is reduced by the amount of the colonial tax. Colonial tax, in these circumstances, ceases to be an effective burden and a reduction of colonial tax is therefore inevitably of no avail as an inducement.