Oral Answers to Questions — Depository Receipts (Taxation)

– in the House of Commons at 12:00 am on 17th April 1986.

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Photo of Mr David Sumberg Mr David Sumberg , Bury South 12:00 am, 17th April 1986

asked the Chancellor of the Exchequer how much revenue he anticipates arising from the imposition of a 5 per cent. duty chargeable when United Kingdom shares are converted into depository receipts.

Photo of Mr Ian Stewart Mr Ian Stewart The Economic Secretary to the Treasury

The measure is intended to compensate for the fact that when shares are bought and sold through the market in the usual way stamp duty is payable on each occasion, but no duty is payable on purchases and sales of depository receipts after shares have been converted into them. The purpose of the charge is therefore to safeguard the £600 million revenue from stamp duty on shares generally.

Photo of Mr David Sumberg Mr David Sumberg , Bury South

I thank my hon. Friend for his reply. However, is he aware that there is a widespread belief that this will put major British companies at a disadvantage when they want to raise capital on the international market? In the light of the fact that there is no reference to it in the Finance Bill, is there some hope that the Chancellor of the Exchequer has accepted the criticisms and that he will scrap the tax?

Photo of Mr Ian Stewart Mr Ian Stewart The Economic Secretary to the Treasury

I am aware of the comments of a number of American and British companies, but we have done nothing in the Budget to prevent foreigners buying shares direct in London. We have made it proper to do so by cutting the stamp duty rate with effect from later this year. We will carefully consider representations on the matter of ADR, as we always do on all Budget measures. Those provisions were not included in the print of the Finance Bill, published yesterday, for the technical reasons that I announced on 21 March.

Photo of Mr Roger Freeman Mr Roger Freeman , Kettering

When my hon. Friend tables amendments to the Finance Bill, will he bear in mind the key principle that we should not be deterring foreign investment in United Kingdom shares?

Photo of Mr Ian Stewart Mr Ian Stewart The Economic Secretary to the Treasury

There is nothing in the Budget, nor will there be in the Finance Bill, to deter foreign investment in United Kingdom shares through London, and we are reducing the rate for doing so.