Clause 87

Part of Orders of the Day — Finance Bill – in the House of Commons at 7:45 pm on 8th May 1985.

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Photo of Mr Terry Davis Mr Terry Davis , Birmingham, Hodge Hill 7:45 pm, 8th May 1985

The hon. Member for Mid-Staffordshire (Mr. Heddle) said that the 1967 Act did not work, and that the Labour Government had therefore introduced development land tax in 1976. The Economic Secretary also had several omissions in his list of previous attempts to tax development gains. Like the hon. Member for Mid-Staffordshire, he forgot to mention that the 1967 Act, which may or may not have worked, was not the reason for introducing the tax in 1976. The tax that was introduced in 1967 was abolished by the 1970–74 Conservative Government. However, that Government had a change of heart, and this fact was omitted not only by the hon. Member for Mid-Staffordshire, who could be forgiven for forgetting about it because he was not in the House at the time, but, more significantly, by the Economic Secretary. When he read his list of taxation measures on development land, he forgot to mention that in 1973 the Conservative Government re-introduced a tax on development gains.

The hon. Member for Mid-Staffordshire then used the adjective "vindictive". He thought that the introduction of a tax on development gains was vindictive. Is he then describing the Economic Secretary as having been vindictive in 1976 when he said that there should be a special and additional tax on development gains? All those words were used by the present Economic Secretary and many other Conservatives when development land tax was introduced. Is the hon. Member for Mid-Staffordshire accusing his right hon. Friend the present Minister for Overseas Development of having been vindictive? We all know that that would be totally out of character.

Many other Conservative Members also accepted the need for such a tax. I have always observed the convention of not referring to hon. Members unless I have told them that I intend to do so, but I believe that that convention arose due to the possibility of hon. Members being attacked in their absence. As I am not making any attack, I make no apology for referring to words, used by Conservative Members in 1976, with which I fully agree. The hon. Member for Wolverhampton, South-West (Mr. Budgen), with whom I rarely agree, said: I accept that it is right that there should be an additional tax upon those values which arise from the granting of planning permission and We accept that there should be some level of taxation at a higher level than the rates for capital gains tax generally".—[Official Report, Standing Committee J, 23 March 1976; c. 15–18.] Another Conservative, the hon. Member for Hove (Mr. Sainsbury), said: We accept the need for a special rate of tax on the granting of planning permission. Our argument is not whether there should be a tax but what its rate should be."—[Official Report, Standing Committee J, 23 March 1976; c. 33.] There was no reference to inflation or speculation, but a clear reference—not a vindictive reference—to the community's justification for taxing these windfall gains arising from the granting of planning permission, so I think that the hon. Member for Mid-Staffordshire went a little over the top in his comments today.