American oil companies enjoy better terms of double taxation relief and depletion allowances than our own companies will enjoy in future. It has been estimated that our companies are likely to have to pay more than 60 per cent. in tax out of their taxable profits compared with under 50 per cent. in the case of American companies. Furthermore, the American shareholder is in a better position vis-à-vis the American oil industry or any other industry because the personal rates of tax are appreciably lower in the United States than in this country.
We must warn the Chancellor that there are American oil companies—we have seen this before in recent years—ready to move in only too quickly if British companies are unable to stay the pace. Recently we had an argument in the House about the effect of a Government economic decision on the British aircraft industry which, we said, was to the great benefit of the American aircraft industry. It would be a tragedy if a similar economic decision were to have a similar effect on a great British oil company to the benefit of the American oil industry. The Chancellor is charged to remember that the Government act as trustees to the British nation for their 51 per cent. share in B.P.
In making these points I urge the Chancellor to think again about the ill effects which this tax will have on existing investment unless he reconsiders the position.
It may be desirable, in present circumstances, to reconsider the position for new investments which will take place in the future. There is no excuse for penalising existing investments, particularly those in vital resources such as oil, minerals and rubber, which mean so much to our economy and to the economies of the producing countries.
B.P. will not find it easy to explain to the Middle Eastern host countries, with which it has only recently had major negotiations, as a result of which the company agreed to pay £10 million more in royalties, that having found that difficult to afford, it will now be able to find several more millions of pounds forced from it by the Government. This is likely to have the effect of bringing new demands from the host countries, to the detriment to this great industry. I appeal to the Chancellor to think again on this issue.
Although there were other points which I had intended to make, time is running out and I will merely remind hon. Members that Abraham Lincoln once said:
You cannot bring about prosperity by discouraging thrift,
You cannot strengthen the weak by weakening the strong,
You can not help the poor by destroying the rich,
You cannot establish sound security on borrowed money…
I believe that the Chancellor knows that and that some of his colleagues on the Front Bench opposite understand it. Unfortunately, not all hon. Gentlemen opposite understand it.
In a report in the Economist on the Budget debate, referring to the point at which the Chancellor spoke of business expenses, it was stated:
Nobody who sat in the House of Commons on Tuesday could doubt that these proposals on business expenses were intended solely to please Labour back benchers at a critical political point in the speech; and very horrid they looked as they yelled their exultation.
Now we have this formula. No doubt it is all part of a deal in which the First Secretary is involved. I say to the Chancellor that if he must bring in this formula we will have to look at it carefully in Committee because, apart altogether from the question of overseas buyers, which is a somewhat narrow definition, let us think of all the delegations which come to this country, in many instances invited here by Her Majesty's Government. Has the Treasury spoken to the Central Office of Information about
this? What about the requests that are made to British industry to entertain visiting Parliamentary delegations and visiting parties of journalists, remembering that all those people can be ambassadors of British trade when they go home?
The Chancellor will have to think about altering some of these things in the interests of exports alone, if he cannot be big enough to realise that this was a silly thing to introduce and that he should withdraw it and leave it to the normal workings of the Inland Revenue.
I suppose that it is too late to hope that the Chancellor will take the advice given to him last week by the Economist, which stated:
It would, therefore, he much better not to bulldoze this rushed job of a Corporation Tax through to the statute book this year. It would be a sign of strength, not of weakness, for Mr. Callaghan to withdraw it even now; and the Opposition will be quite right to vote against it in the House.
That very publication, which is of international repute, made the terrible mistake of advising the electors to vote for the right hon. Gentleman's party last October.