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Mr. Breed: When a company or business moves, it is an enormous event in its lifetime. A great range of costs is incurred--not only removal, but stationery and so on. What percentage of the total costs does the stamp duty represent?
Mr. Jack: With respect, the hon. Gentleman misses the point. The percentage that it represents is irrelevant. It represents an additional expense, and there would no need for it to be incurred if our amendment was accepted.
I would appreciate it if the Financial Secretary were to respond to my next point. It is instructive briefly to consider the history of stamp duty because it is important that the Government should justify why they change rates and increase the taxes that they impose on business. Interestingly, stamp duty arose in the Netherlands in 1624 as a result of a competition to find a new form of tax. It strikes me that there has been a competition in the Treasury to find novel ways of raising money. When the tax first came to this country in 1694, it was levied on the materials of business of the day--vellum, parchment and paper. Not much has changed in the past 300 years.
I embarked on that historic voyage to make the point that stamp duty's original purpose was to extract tax revenue from company income when there was no corporation tax, uniform business rate or other business tax by taxing capital transactions. The hon. Member for Shipley asked why we should deny ourselves the extra revenue. Given that there are now other means of taxation, can the Financial Secretary say why the Government have chosen to raise additional money from business via stamp duty? I accept the criticism that we did not tackle the question of whether stamp duty was a valid tax but, as the Government have embarked on what I would call exploiting a nice little earner, they should publicly justify why this tax and not others has been chosen.
However, we can see what the effect would have been had the Chancellor done that. I should point out that the amount would be £5.2 billion overall. According to the Library, it is estimated that 60 per cent.--that is £3 billion--will fall on business. That is in addition to the extra taxes that business is already having to bear through the corporation tax changes introduced by the Government. That shows why my right hon. and hon. Friends on the Front Bench described that operation as a stealth tax. It may not occur often in individual businesses, but the cumulative effect shows that the tax has turned into a nice little earner for the Treasury.
It is evidently an uneven tax in its impacts on different parts of the country. In areas where property and land values are higher--London and the south-east--there will be a disproportionate tax burden to bear. However, if we consider the problems of east London and business development there, we find that that area is in almost as much in need as some of the so-called derelict parts of regions such as the north-east and the north-west, which are traditionally seen as difficult. This measure comes from a Government who are supposed to be business friendly.
When we look across the net receipts of Inland Revenue taxes, an interesting pattern emerges, which explains why business is now being asked to pick up the tab for this extra stamp duty. At the beginning of this century, stamp duty was hardly noticeable--it raised only £8 million. However, the total effect of the Government's proposals for the current financial year is that £5.7 billion is written into the Government's estimates. If, as a starting point, we compare the levels of stamp duty that will be raised in the current financial year with the levels in the financial year in which the Labour Government took office, it is clear that stamp duty has risen by plus 65 per cent. in their estimated receipts. If we bear in mind the finding that 60 per cent. of the burden will fall on industry, business and commerce, we begin to see what the Government are about.
I suspect that the Financial Secretary will have received analyses from the Inland Revenue showing that receipts from another business-based tax--petroleum revenue tax--were rapidly dropping and that capital gains tax and inheritance tax were of limited value. She would have been told that stamp duty had magically become theNo. 3 earner among Inland Revenue taxes. She would have been told: "What a good idea it would be, Financial Secretary, if you visited this rather neglected area, because it is a nice easy tax. You will not get too many queues of complaining people at your door. Let's have a go". My God, she took the bait in full measure.
However, we must not lose sight of another stealthy bit of Government activity. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) will recall tabling a parliamentary question in which he attempted to elicit the facts about how the tax burden between residential and commercial property would change over
time as a result of the changes in stamp duty. Interestingly enough, in the financial year 1997-98, 60 per cent. of stamp duty was raised from residential property and 40 per cent. from commercial property. However, the Treasury's own estimate for the year 1999-2000 is that that burden will be evenly shared between business and residential property. There is an element of politics creeping into this issue; it is clear that the Government think that business is a soft touch, and that no one will complain too much, so there is an element of burden shifting.
The burden of stamp duty is rising for business--hence the earlier remarks of my hon. Friends who drew the attention of the Committee to the problems that would arise in the property market. The Financial Secretary should give the Committee some economic analysis--or lay the information in the Library, if she does not have it with her--if it is necessary to repudiate the arguments made by Conservative Members this evening.
The British Federation, whose report by the London business school has been quoted, has spent a lot of money justifying its point of view. Perhaps the Financial Secretary would like to produce her own analysis to reassure, if she feels it necessary, the business community that it will not be adversely affected, as my hon. Friends have predicted.
Without doubt, there are long-term implications. It has been reported that the Government's measures will reduce liquidity in the business sector and inhibit the ability of industry to take on new space. Mr. Angus McIntosh, a director of commercial property consultants Richard Ellis, and therefore someone who is in the front line of business lettings and activities, says that the higher duty could threaten more marginal office and industrial schemes, but adds that the retail market might well find a way around the problems. I thought that the Government wanted to encourage the sort of office and industrial schemes that typify many areas of industrial renaissance. Can the Financial Secretary really be promoting a policy that appears to act against the objectives expressed in other parts of the Budget statement?
One of the Trojan horse arguments that has been advanced in respect of the Government's aims is that their proposals on stamp duty on business are a staging post on the way to higher business taxes, on a par with those of Europe. I join my hon. Friends in asking the Financial Secretary to give us some indication of the Government's policy in that specific area of tax. I know that she cannot stand up and say, "There will be no change in tax rates", because, even though the Government said that, they did not mean it. Instead, I should like her to concentrate on words that she does mean.
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