Clause 18. — (Taxation of Capital Gains.)

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 Frederic Harris Mr Frederic Harris , Croydon North West 12:00, 25 May 1965

I shall keep the Committee for only a few moments. I think that my hon. Friend the Member for Ilford, South (Mr. Cooper) was wrong to assume that the Chief Secretary will automatically turn down this Amendment, especially with his background of accountancy. I go along with the hon. Member for Manchester, Cheetham (Mr. Harold Lever) in this matter. I have listened to every part of the discussion and there is no question that the mistake here is for the Chancellor, to save the capital tax arising, to tie the problem down to having to use capital appreciation to purchase an asset of a similar kind. Obviously, in all commerce, one is constantly broadening the base of one's business, and one turns to various moves which will be helpful to the company and its employees. One should be free to undertake those developments.

If the tax is tied with capital distribution only because of some capital gain which has been made by the company, this is the right move. I can say that we should go along with such a proposal. If I can myself declare a vested interest in this matter—because we were told yesterday several times to declare our interests—I am chairman and managing director of a public company which, years ago, sold a factory for a considerable sum of money and made a capital gain. Virtually all that money was ploughed back into the company for other further developments and it is now playing an important part in financing and handling exports from this country to certain under-developed countries. That would not have been possible if we had not been fortunate enough to make the money from the sale of these premises.

It seems to me entirely wrong that we or any similar company might be precluded from undertaking such beneficial moves—from the point of view of the country—of exporting overseas, merely because of the application of such a Capital Gains Tax as is now proposed.