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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 7:13 pm on 6th July 1983.

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Photo of Mr John Townend Mr John Townend , Bridlington 7:13 pm, 6th July 1983

I see no inconsistency at all. Taxation at 98 per cent. is tantamount to confiscation, driving capital and people out of the country. I am advocating the ending of wages councils in order to create jobs. They are reducing jobs, particularly those for young people.

I had hoped that after the Government were returned to office, with an even greater majority, their first Finance Bill would be as courageous as that after 1979 and bring in some radical reforms and simplifications in taxes. In particular, I looked forward to seeing the abolition of the investment income surcharge, because that would be an important move towards simplification. I have never understood the principle behind that tax. I could never see any justification in taxing the income from savings at a higher rate than earnings. As there is no logical reason for it, it has resulted in much discrimination and many problems and anomalies, not least of which is the nonsense whereby, if a man and wife have a reasonable investment income, they can save tax by having a divorce and then living together. It also works against people who decide that they want to invest privately for their old age in the Stock Exchange as opposed to a pension scheme.

Landowners who let their land to tenant farmers are adversely affected compared with those who farm the land themselves. That is one of the most important reasons for the drying up of farm tenancies for young farmers. Indeed, many people in private business avoid paying the investment income surcharge altogether by paying excessive directors' fees or salaries. On occasions, that adversely affects minority shareholders whose only income from such companies is from dividends.

I understand that the yield from this tax is only about £250 million a year. I could spend half an hour suggesting where that money could come from, which might please the Whips, but I am sure that it would not please you, Mr. Deputy Speaker. In the context of our total budget, it is a small amount. Despite their large majority, the Government have not seen a way to include it in the Bill, but it would provide an important step in the simplification of our tax structure and reduce many anomalies to which people object so strongly. Therefore, I ask my right hon. Friend to press the Chancellor to include this in the next Finance Bill.

It is pleasant to speak in support of a Bill with which one agrees 100 per cent. That may be because it is a short Bill, but it provides many benefits in many ways and I commend it to the House.