Clause 60. — (Double Taxation Relief, and Overseas Trade Corporations.)

Part of the debate – in the House of Commons at 12:00 am on 16 June 1965.

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Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth 12:00, 16 June 1965

Thirdly, the Chancellor's decision on the external aspect of Corporation Tax surely seems particularly unhapy at a time when industry and technology are becoming more international than ever before. As The Statist said at the time of the Budget: The attitude to overseas investment reflected in the Budget is that of the little Finglander… At a time when the countries of Europe are moving towards real economic unity we appear to be withdrawing into our shell. I do not believe that temporarily tightening exchange control would have given the same impression as the Chancellor's present measure.

I come now to the arguments which the Chancellor has used to justify his decision and perhaps the right hon. Gentleman will at any rate agree that arguments which he has used in the course of debate are legitimate matters for someone on this side of the Committee to discuss on this occasion. I shall mention four arguments which the right hon. Gentleman has used.

First, the right hon. Gentleman said, in the early stages of the debate on the Budget, that there was a "positive bias" towards overseas investment in our present tax system. I shall not deal with this at length, because I think that the Chancellor will now agree that, at least as regards direct investment, he has overstated the case here. However, looking back over the whole debate so far, I think that the Chancellor himself goes much too far when he almost speaks at times as though overseas tax paid by United Kingdom companies is just in the nature of a foreign charge. I think that it is, broadly, the right principle that tax should primarily be paid in the countries where the income is earned. But I recognise that the Chancellor has, to some extent, gone back on his original statement that there was a positive bias towards overseas investment in our present tax system.

But there is a second argument which both the Chancellor and the Chief Secretary have very often used with which I wish to deal particularly because I regard it as entirely irrelevant. Both right hon. Gentlemen have made considerable play of the fact that the return to this country on overseas investment is less, on the average, than the return on domestic investment.