Clause 19. — (Capital Gains Tax.)

Part of Orders of the Day — FINANCE (No. 2) BILL – in the House of Commons at 12:00 am on 25 May 1965.

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Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester 12:00, 25 May 1965

The debate on this Question has included many references to earlier discussions which have taken place today on Amendments and even to yesterday's debate. I am sure therefore that the Committee would not wish me to go over all the ground that has already been covered. Hon. Members can refer to HANSARD for the speeches on the points made and the answers given. [HON. MEMBERS: "Not always."] I hope therefore that it will be for the convenience of the Committee if I deal only with the points raised on the Question that the Clause stand part of the Bill.

The right hon. and learned Member for Huntingdonshire (Sir D. Renton) asked whether it was wise that farms should be the subject of a Capital Gains Tax. His argument seemed to be that inasmuch as we treat farming favourably in many respects why did not we treat it exceptionally favourably in this respect. [HON. MEMBERS: "No."] Yes, this was his argument. We did this, that and the other for farming, why did not we do this yet further thing for farming? One is not leaning against or in favour of farming in the Capital Gains Tax. The right hon. and learned Gentleman will not mind my reminding him that this tax is levied on realised gains. There is no question of being asked to pay the levy until the gain has been realised.

From the point of view which he raised, the question of providing adequate money for running the farm and adequate working capital, there is no distinction between money provided out of realised capital gains and money provided out of realised profits in the running of the farm. In each case, funds are provided. In the one case, they have been taxed, and always have been, according to the rate of profit, which is a fair way of dealing between one farmer and another or one income earner and another. What have not been taxed are realised capital gains. Now they are to be brought in in just the same way as every other business or individual is brought in.