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Clause 18—(Annual Allowances, Etc, For Overseas Mineral Rights)

Volume 466: debated on Thursday 23 June 1949

The text on this page has been created from Hansard archive content, it may contain typographical errors.

I beg to move, in page 9, line 36, after "on," to insert:

"(a) the acquisition of the site of the said source, or of the site of any works provided that in either case such site is likely to be of little or no value when the source is no longer worked, or, where the source is worked under a foreign concession, is likely to become of little or no value when the concession comes to an end to the person working the source immediately before the concession comes to an end, or
(b) rights in or over any such site, or
I hope this will be a case of "third time lucky" As the Committee knows, Clause 18 extends the allowances given to overseas mining companies. This is an old story. When my right hon. Friend the Member for the Scottish Universities (Sir J. Anderson) brought the Income Tax Act, 1945, before Parliament, one or two of my hon. Friends and myself raised this point, that Part III of that Act, which dealt with the allowances given to mining companies, were not sufficiently wide, and every year since we have laboured in this direction. Last year we were rewarded by the Chancellor, who appointed a Departmental Committee to go into this question of the relative taxation upon British overseas mining companies compared with the taxation paid by Canadian, American and other mining companies. The Clause we are now seeking to amend is the result of the labours of that Committee, and I would begin by thanking the Treasury for the work they have done and by saying that while we are grateful for what the Clause does, we still feel it does not quite cover the field we had in mind.

The Amendment provides that the type of capital expenditure upon which the allowance may be granted shall be widened by the inclusion of money spent upon the site. The Clause as drafted grants the extra allowance upon the deposit of the minerals, but very frequently the company which is exploiting the minerals also has to buy the site. Furthermore, these sites in foreign countries are often in remote places; and as soon as the mineral is discovered the price of the land adjacent to the deposit goes up, as hon. Gentlemen opposite very well know. If the purpose of the allowance is related to the fact that when the deposit of the mineral is worked out the site is no longer of any value and, therefore, the allowance must be given over the life of the workings of the mineral deposit, it also follows that the value of the land which the company must buy for the erection of buildings, houses, offices, dumps and so on, ceases to have any substantial value in a remote place when the mine itself is exhausted.

It sometimes happens that the purchaser of the mineral deposit buys from one and the same seller the land adjacent; there is one transaction. Therefore, as the Clause stands, there would have to be an apportionment between the value of the mineral deposit and the value of the surrounding land to discover what the new allowance would be. That is a very clumsy arrangement, and I hope that the Government will see that it is reasonable to include the site.

There are some mines where the deposit is in a mountain range and the ground is very steep, and it is not possible adjacent to the shaft to erect the buildings and dumps. Hon. Gentlemen will know that there are many cases where the ore is conveyed by rope railway or something of that description to a more level piece of ground in the valley, which acts as the centre for refinement and the metallurgical plant and the buildings connected with the mine. I do not know whether hon. Gentlemen are familiar, for instance, with the very well-known British wolfram mine in Portugal belonging to the Beralt Company. That is an excellent example of a mine situated in an utterly desolate region. When that ore body is exhausted the site and the buildings will be absolutely valueless. I cannot imagine anyone in his senses going to live in that valley once the mine is finished.

It is quite reasonable, therefore, that we should ask for the new depreciation allowance to cover the site. Although I never like to say that things are done better in other countries than here, it is a fact that American and Canadian mining companies get the allowance on the site. It is not unreasonable, therefore, that we should ask the Government to extend the very welcome provisions of the Clause to cover the site.

10.0 p.m.

My hon. Friend the Member for Chippenham (Mr. Eccles) has pointed out that, having gone some way towards improving the position, it is a pity that the brake should have been put on when such a just and obvious case can be made out for this concession. It is really striking how often overseas minerals are located in apparently the most worthless areas of the world. There seems almost to be some form of compensation operating whereby in a barren desert or lonely mountains, mineral deposits should be found instead of in good agricultural land.

One only has to look at sites on the African Continent today to see how little value is the land once the minerals have been worked out. The Northern Rhodesia copper belt is in a large stretch of desolate scrub country which can have no value once the copper has been worked out, and the same is true of mines on the Gold Coast, 30 or 40 miles inland, where prosperous townships have grown up because of the existence of the mines. Those who make additional mines in the future will be faced with a comparatively expensive proposition of buying the property to erect the ore crushing and ancillary plant. Once those mines have been worked out—and they will not be limitless—the land will revert to semitropical forests of no particular value.

A more striking case can be found in the oilfields, particularly in the Persian Gulf regions, which were desolate until the works were established. The land rapidly acquires a new value, thanks to the enterprise of Arab merchants not hindered nor fettered by a Town and Country Planning Act, or any other device. To deny this allowance to a British-owned oil company is to impose a burden upon it when the oil is worked out and the land will revert to the desert it always was. One can see the increase in land values taking place at Kuweit, whereas, further down the coast, at Bahrein, where the field is approaching exhaustion, the reverse process begins to operate. I hope that the Solicitor-General will extend the equity and logic of the case so far put forward as to cover the whole of this matter.

The points advanced by the hon. Members who put forward the Amendment are already adequately covered by the Clause as it stands. If hon. Members will look at Subsection (9) they will see that it incorporates in the Clause some of the provisions of the Income Tax Act, 1945, and amongst the provisions incorporated in the Clause is Section 58 (1) of that Act. That has the effect that when one speaks of acquiring minerals and right to mineral deposits overseas in Clause 18, one is taken to refer to acquiring rights to the mineral deposits plus land which one buys with those rights so far as one can say that the land, on a just apportionment, should be taken as being coherent with the rights.

Supposing one buys land on which there are mineral deposits and that land extends some distance apart from the mineral deposits and independently of their existence, has a value, as agricultural land. The independent value it has as agricultural land has no connection with its mineral deposit value and in a case like that the effect of the Clause is this: When one buys the land and the deposits one is taken to include in one's purchase of the deposits the purchase of that part of the land which immediately relates to the deposits. The effect of that is that what hon. Members had in mind is already covered. The site of the mineral deposits, so far as it can be fairly be said to be the site of them is already in the provisions of the depreciation allowances.

That is the effect of reading Section 58 (1) of the 1945 Act into the Clause. One has to say what it is one has bought. One has bought land on part of which there are mineral deposits. A just apportionment is worked out, which has to be settled by the Inland Revenue in case of disagreement. If the company which buys the land disagrees with the Inland Revenue with regard to the apportionment, if it thinks that a wider stretch of land should have been apportioned to the mineral deposits, it has its ordinary right of appeal to the General or Special Commissioners, and they can review the question of whether the apportionment is a just one.

I think that hon. Members will agree, on reflection, on hearing that this Section of the 1945 Act is incorporated in Clause 18, that their point is already covered. By that I mean that when one buys a deposit one has the right to have a depreciation allowance not merely in respect of the price of the deposits themselves but also in respect of that part of the price which is attributable to acquiring to what can fairly be said to be the site of the deposits. If there is some part of the land which has a value quite independently of the mineral deposits—I have taken agricultural land as an example—I think hon. Gentlemen will agree that it is not reasonable for a writing off allowance to be granted against that portion of the value. One is entitled to get one's depreciation allowance against that part of the price which is referable to the purchase of the deposits and to that part which is referable to the site on which the deposits are to be found. For those reasons I hope that hon. Gentlemen will not desire to press their Amendment.

Could the Solicitor-General indicate whether what he has said covers the point made by my hon. Friend the Member for Chippenham (Mr. Eccles) in the case of mineral deposits on a mountain which have to be taken down to some place on the flat land where the necessary buildings have to be erected? It may be that that flat land cannot by any stretch of the imagination be said to adjoin the mineral site; it may be some distance away. From what the Solicitor-General said it did not seem to be quite clear that that case was covered by the provision of the 1945 Act. Will the right hon. and learned Gentleman give us an assurance that that point is covered?

May I quote the relevant words of Section 58 of the 1945 Act? They are that such portion of the whole property:

"as, on a just apportionment, is properly attributable to the first-mentioned property. …"
One cannot give a priori a castiron ruling on the point. One has to consider the circumstances in relation to each purchase. One has to try to get a just apportionment, and there is a right of appeal in a case in which the company thinks the decision to be unfair to it. Having regard to the sort of overseas property which one is considering, that is as near to justice and fairness as one can get, and, as I said, I hope that hon. Members will not press their Amendment.

I am much relieved to hear the explanation of the Solicitor-General. Would he also give an assurance that if the land is not bought at the same time as the mineral deposit that purchase also ranks for consideration under the provision of Section 58? I ask that because there are clearly times when a mine extends its operations and might need to buy a little extra land.

I am afraid that that is not covered. It has to be bought pursuant to one bargain. The requirement of Section 58 is that there has to be one bargain and therefore the answer to the hon. Member's question will be in the negative.

Then I am afraid it is not satisfactory, because after all mining is a very speculative business. One may start in a small way and after a bit be fortunate enough to discover that the ore bed is bigger than was thought, and additional land is needed. It really is not logical to give an allowance in respect to some land bought for a pilot plant, and not give an allowance in respect of land necessary to put up a large production plant and the additional dumps.

It may be that my Amendment can be framed more narrowly simply to meet this particular point. I am prepared to withdraw it on the understanding that I may look at the wording of my Amendment again, and re-draft it and put it down on Report stage. It is not logical to confine an allowance to the original piece of land. I beg to ask leave to withdraw, but I shall put this down again in a more practical form.

May I draw the attention of the right hon. and learned Gentleman to a case in point in Venezuela, where at this very moment the British Shell Company is being forced to refine its oil in that country, and being forced to acquire additional sites to those already possessed for oil production in Venezuela? Here is an example of what can happen unless something like the Amendment is accepted.

Amendment, by leave, withdrawn.

I beg to move, in page 10, line 11, to leave out from the beginning, to the end of line 41, page 11.

I think that these subsections were put down under a misapprehension. The Clause as it is now drawn confines the allowance to the bargain struck by the first British purchaser of the foreign property. It appears to me that the Treasury do not understand the general practice of mining companies abroad. The fact is that in very many instances the company which is proposing to exploit the mineral deposit purchases it from another British company which has done the prospecting. I think it is right to say that, at one time at any rate, the British South Africa Company owned all the mineral rights in Rhodesia. Therefore, any other company, whether it be British or American, which goes into Rhodesia and wishes to start a mine there must deal with the chartered company. That being so, as the Clause is drafted, the allowance could only be calculated on what the chartered company in the dim past gave to some African chief when they were making a treaty with him to cede the mineral rights to them. Really, that goes against the principle of the Clause.

10.15 p.m.

I think it also possible that the Treasury have felt that bargains at arm's length do not occur between two British companies, that they will be connected companies and that the prospecting company, if the Clause were amended as I wish it to be, would put up the sale price to the mining company in order to get a bigger allowance. That is covered already by the provisions of the Income Tax Act, 1945. Section 59 of that Act ensures that for the purpose of capital allowances sales shall be deemed to have taken place at a price which the property would have fetched in the open market if that price is lower than the value at which the property did in fact change hands. There is also a provision in Section 28 of that Act for balancing charges to be met where the source, or part of it, is sold as a going concern.

Those provisions were incorporated in the 1945 Act in order to safeguard the Revenue against claims based on artificial figures of expenditure. Since they are recognised as being adequate for that purpose in relation to all the other assets ranking for allowances, there seems to be no reason why they should not be simi- larly adequate in the case of mineral deposits. Again, it will create a hardship as between British and American mining companies if the Clause is left as it stands. An American mining company could purchase a mineral deposit from a British prospecting company and obtain allowances on the whole of the price, whereas our companies could not do that. That is not desirable and I hope that the Government will extend the width of this Clause in the manner which this Amendment seeks.

I wonder whether, when the Treasury had this Clause in draft, they fully appreciated that the development of mining properties very often is a two-tier or double-decker undertaking. The first tier or level consists of the prospecting company specialising in that class of work, taking that class of risk which involves initial surveys and following up scanty evidence, as it often is at first, until it has reached the stage where it can say that a definite mining property can be said to exist. Having reached that stage it then sells an area which is reasonably well proved to another company which takes on the second stage of exploitation—namely, the large-scale extraction of the ore from the ground.

It seems wrong to subject British mining companies to what in effect is a form of double taxation. It means that the prospecting company has, in fact, to pay tax on the result of its prospecting work, because as it specialises in that class of work it pays on all increases in value of the property which it acquires on sale—on the difference between the original purchase price and what it sells the property for as a reasonably well-proved area. It is surely, therefore, quite illogical to allow to the purchasing company for tax relief purposes only the original purchase price which the prospecting company paid for the land when it was not at all sure there was any mineral there at all. It is quite unfair to insist that growth in value of the property as a result of the first company's work should be taxed a second time in the hands of the second company when that company is developing a proved area which it is taking over. It seems quite indefensible to allow this additional burden to fall on what is inevitably a very risky and speculative business, namely, the development of mineral properties overseas.

My hon. Friend the Member for Chippenham (Mr. Eccles) has fully pointed out how any danger of abuse can be prevented. It may be, indeed, that these subsections have been introduced only because of the danger of such abuse, but it is quite clear, of course, that the relevant Clause of the Income Tax Act, 1945, designed specifically to prevent transactions between inter-connected undertakings at artificial prices for the purpose of avoiding tax, can equally well apply to transactions between a prospecting company and a mining company that may be tempted to avoid any tax. We have shown how abuses can be prevented; we have shown how the subsections, as they stand at present, are a definite handicap to British mining enterprise overseas; and I hope that the Solicitor-General will see his way to accept our Amendment.

I am sorry to say that we do not see our way to accept this Amendment, and I cannot help thinking that the proposal contained in the Amendment is really based on a misconception of what we are proposing in Clause 18. Clause 18, as appears on its face, provides for annual allowances on the acquisition of overseas mineral rights. Now, in order to explain my objection, I think I must refer to the principle upon which the taxation of these mineral rights proceeds, and which really finds its root in the many existing Income Tax principles in these matters. They were, as hon. Members know, examined and reported upon by the Royal Commission on the Income Tax in 1920.

I think the Committee remembers that that was a comprehensive report which examined the whole basis of the Income Tax legislation of this country, and the principles of that Report, which are of general application, have been adopted and followed, and are still followed, in general outline at any rate, in the Income Tax legislation which we have at this moment. It is a fundamental principle of the Income Tax legislation of this country, and a principle which was restated—I will not say laid down, but re-stated—in the Report of the Royal Commission on the Income Tax in 1920, that a depreciation allowance or a writing-off allowance cannot be conceded in the case of mineral rights in this country.

The general reason, the general basis, of that principle is this. If mineral rights in this country are already potential sources of income, and if they are transferred from one person to another, there is no new source of wealth created, as it were. There is nothing one can write off an allowance against when all that happens is that a source of income is transferred from one person to another. That was accepted as a basic reason why depreciation allowance should not be written off against exploitation of mineral rights existent in this country. They are already here as a source of income.

A not unanalogous process of reasoning can be applied to other sources of income. There cannot be depreciation allowances against the purchase price of sources of income. Consider, for example, a lease. Hon. Members know that often in this Committee on previous occasions we have discussed whether in principle a depreciation allowance should be granted against a premium when paying for a lease. That has always been resisted, by successive Governments, in conformity with the principle which has been stated in the Report of the Royal Commission on the Income Tax.

The Royal Commission said that where there is brought into existence something which was not theretofore a source of income in this country, then certainly there can be a depreciation allowance against the cost of bringing it into existence. Therefore, when, by buying overseas mineral rights, a new source of income is brought into existence, it is perfectly consistent with the principle that the Royal Commission laid down that depreciation allowances should be allowed against the purchase price of that right to foreign income. For that reason, and in order to assist the exploitation overseas of mineral rgihts, we are in Clause 18 following that principle by providing depreciation allowances upon the acquisition of mineral rights overseas.

Against that, the principle which we are following requires that depreciation allowances will be given only against the first cost; that is to say, the cost first incurred by the United Kingdom company in the acquisition of the rights. If one English company buys rights for £100,000 and then sells to another English company for £200,000, depreciation is allowed against the first £100,000, because the second £100,000 does not create any new sources of wealth in the United Kingdom. It is the first purchase for £100,000 which has brought into existence that taxable asset as an asset upon which United Kingdom tax can be levied. That is why, in conformity with that principle, which I am afraid is rather complicated—to those hon. Members who have probably looked on more than one occasion at the report of the Royal Commission, I would point out that I am quoting from paragraph 191—we say, as there recommended, that the only writing off allowance should be against the first cost to some United Kingdom company; that is to say, some company controlled from or owned in the United Kingdom.

For those reasons, I feel that if we accepted this Amendment we should be entirely throwing overboard that principle, and it would constitute a very serious departure which would involve the Revenue in loss. The general principle is that the Exchequer must be entitled to get its tax on all profits from United Kingdom property. Therefore, we have to look to the first cost of creating a United Kingdom asset in asking what the depreciation allowance can be written off against. It is my fault if I have not made it clear, but it is a rather subtle and difficult principle to expound. It has been accepted over a number of years, and I am taking it directly from paragraph 191 of the Report of the Royal Commission on Income Tax, prepared in 1920, which has been consistently followed, and which we are now following in framing the proposals of Clause 18. For those reasons, I hope the Committee will agree that there is no sound reason for accepting this Amendment. It would indeed lead to serious loss and a great deal of confusion if we departed from the very clear principle stated by the Royal Commission.

What an out-of-date, old-fashioned party we find opposite us today. Here is a party, which prides itself on being modern, but which in tackling all the different situations of the postwar world compared with the pre-war world bases itself on an out-of-date principle of 1920. Let us just follow what happens. The Solicitor-General says that if mineral rights have once existed they bring to somebody an income, and if they change hands there cannot be any depreciation allowance given to the second or third buyer because it is already within the taxable ambit of this country, and they have existed here for some time.

10.30 p.m.

Look what nonsense this makes of overseas mining. There are many British prospecting companies. They acquire the right to some tract of country for very little money, and they send out an expedition of geologists and mining engineers. The company spends a lot of money and after a time proves that there is an interesting ore body there. They have to get that money back. That tract of land is now worth a very great deal more than when the company first acquired its rights. The company itself is not a mining company. It has to sell the right to exploit the ore body on which it has spent a great deal of capital to someone who will develop it. Who wants to develop the deposits? Well, there are Americans, Canadians, people from all over the world anxious today to open up raw materials. But if they go to a British buyer, that British buyer is handicapped. He has got to pay, naturally enough, market price. That includes the money which has been spent upon proving the particular ore body. But he can get no allowance on the money spent because of this principle of Income Tax.

I dare say it is wonderfully good in law or logic, or whatever it may be; but it goes against the interests of this country. I want to see British mining companies upon an equal footing with other mining companies in developing the world. Oil companies are included in this Clause. Why should we be handicapped because of this dusty old principle? I think it is an absurd argument which has been put up. We must see that our overseas business is on all fours with the overseas business of other countries. To have a legal objection of this sort put up to us just will not do.

I hope the Government will reconsider this position. After all, what we want is that British companies shall operate overseas so as to bring revenue to this country. As the law stands now, what is going to happen is that an overseas concession is not going to be operated or exploited by a British company. It will be operated or exploited by American or Canadian com- panies, or by some company or companies formed in South Africa or Southern Rhodesia, or somewhere else. Revenue which might accrue to this country will go to these other countries. That is a situation which is not in the interest of this country, and I hope that for the reasons which have been so clearly stated,

Division No. 174.]


[10.35 p.m.

Acland, Sir RichardFletcher, E. G. M. (Islington, E.)McLeavy, F.
Albu, A. H.Follick, M.MacPherson, Malcolm (Stirling)
Alpass, J. H.Foot, M. M.Mallalieu, E. L. (Brigg)
Anderson, A. (Mother Well)Forman, J. C.Mallalieu, J. P. W. (Huddersfield)
Attewell, H. C.Freeman, J. (Watford)Mann, Mrs. J.
Austin, H. LewisGaitskell, Rt. Hon. H. T. N.Marquand, Rt. Hon. H. A.
Awbery, S. S.Ganley, Mrs. C. S.Mathers, Rt. Hon. George
Ayrton Gould, Mrs. B.Gibbins, J.Middleton, Mrs. L.
Bacon, Miss A.Gibson, C. W.Mitchison, G. R.
Baird, J.Gilzean, A.Monslow, W.
Balfour, A.Glanville, J. E. (Consett)Moody, A. S.
Barstow, P. G.Goodrich, H. E.Morley, R.
Barton, C.Gordon-Walker, P. C.Morris, Lt.-Col. H. (Sheffield, C.)
Bechervaise, A. E.Greenwood, A. W. J. (Heywood)Morris, P. (Swansea, W.)
Bellenger, Rt. Hon. F. J.Grey, C. F.Mort, D. L.
Benson, G.Grierson, E.Moyle, A.
Berry, H.Griffiths, Rt. Hon. J. (Llanelly)Nally, W.
Beswick, F.Griffiths W. D. (Moss Side)Neal, H. (Claycross)
Bevan, Rt. Hon. A. (Ebbw Vale)Guest, Dr. L. HadenNoel-Baker, Rt. Hon. P. J. (Derby)
Binns, J.Gunter, R. J.Oldfield, W. H.
Blenkinsop, A.Guy, W. H.Orbach, M.
Blyton, W. R.Hale, LesliePaget, R. T.
Bowden, Fig. Offr. H. W.Hall, Rt. Hon. GlenvilPaling, Rt. Hon. Wilfred (Wentworth)
Braddock, Mrs. E. M. (L'pl. Exch'ge)Hamilton, Lieut.-Col. R.Paling, Will T. (Dewsbury)
Braddock, T. (Mitcham)Hannan, W. (Maryhill)Palmer, A. M. F.
Brook, D. (Halifax)Hardman, D. R.Parker, J.
Brooks, T. J. (Rothwell)Hardy, E. A.Parkin, B. T.
Broughton, Dr. A. D. D.Harrison, J.Paton, J. (Norwich)
Brown, T. J. (Ince)Henderson, Joseph (Ardwick)Pearson, A.
Bruce, Maj. D. W. T.Holman, P.Peart, T. F.
Burden, T. W.Holmes, H. E. (Hemsworth)Piratin, P.
Burke, W. A.Horabin, T. L.Porter, E. (Warrington)
Butler, H. W. (Hackney, S.)Houghton, A. L. N. D. (Sowerby)Price, M. Philips
Callaghan, JamesHoy, J.Proctor, W. T.
Carmichael, JamesHudson, J. H. (Ealing, W.)Pursey, Comdr. H.
Chamberlain, R. A.Hughes, Hector (Aberdeen, N.)Randall, H. E.
Champion, A. J.Hughes, H. D. (W'lverh'pton, W.)Ranger, J.
Chetwynd, G. R.Irvine, A. J. (Liverpool)Rankin, J.
Cobb, F. A.Irving, W. J. (Tottenham, N.)Rees-Williams, D. R.
Coldrick, W.Isaacs, Rt. Hon. G. A.Raid, T. (Swindon)
Collindridge, F.Janner, B.Rhodes, H.
Colman, Miss G. M.Jay, D. P. T.Richards, R.
Cook, T. F.Jeger, G. (Winchester)Roberts, Goronwy (Caernarvonshire)
Corbet, Mrs. F. K. (Camb'well, N. W.)Jeger, Dr. S. W. (St. Pancras, S. E.)Robertson, J. J. (Berwick)
Corlett, Dr. J.Jenkins, R. H.Robinson, Kenneth (St. Pancras, N.)
Cove, W. G.Jones, D. T. (Hartlepool)Rogers, G. H. R.
Crawley, A.Jones, Elwyn (Plaistow)Ross, William (Kilmarnock)
Crossman, R. H. S.Jones, P. Asterley (Hitchin)Royle, C.
Cullen, Mrs.Keenan, W.Segal, Dr. S.
Daggar, G.Key, Rt. Hon C. W.Shackleton, E. A. A.
Daines, P.King, E. M.Sharp, Granville
Dalton, Rt. Hon. H.Kinley, J.Shawcross, C. N. (Widnes)
Davies, Edward (Burslem)Lang, G.Shawcross, Rt. Hn. Sir H. (St. Helens)
Davies, Ernest (Enfield)Lavers, S.Shurmer, P.
Davies, Haydn (St. Pancras, S. W.)Lee, F. (Hulme)Silverman, J. (Erdington)
Davies, R. J. (Westhoughton)Lee, Miss J. (Cannock)Silverman, S. S. (Nelson)
Davies, S. O. (Merthyr)Leonard, W.Simmons, C. J.
Deer, G.Lever, N. H.Skeffington, A. M.
Delargy, H. J.Levy, B. W.Skeffington-Lodge, T. C.
Donovan, T.Lindgren, G. S.Skinnard, F. W.
Driberg, T. E. N.Logan, D. G.Smith, H. N. (Nottingham, S.)
Dugdale, J. (W. Bromwich)Longden, F.Smith, S. H. (Hull, S. W.)
Dumpleton, C. W.Lyne, A. W.Snow, J. W.
Edwards, W. J. (Whitechapel)McAdam, W.Sorensen, R. W.
Evans, Albert (Islington, W.)McAllister, G.Soskice, Rt. Hon. Sir Frank
Evans, John (Ogmore)McGhee, H. G.Sparks, J. A.
Evans, S. N. (Wednesbury)McGovern, J.Steele, T.
Fairhurst, F.Mack, J. D.Stewart, Michael (Fulham, E.)
Farthing, W. J.McKay, J. (Wallsend)Stross, Dr. B.
Fernyhough, E.Mackay, R. W. G. (Hull, N. W.)Stubbs, A. E.
Field, Capt. W. J.McKinlay, A. S.Swingler, S.

the Government will look at this again, and put right what obviously is wrong.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 257; Noes, 109.

Sylvester, G. O.Walkden, E.Williams, J. L. (Kelvingrove)
Symonds, A. L.Wallace, G. D. (Chislehurst)Williams, Ronald (Wigan)
Taylor, H. B. (Mansfield)Wallace, H. W. (Walthamstow, E.)Williams, W. T. (Hammersmith, S.)
Taylor, R. J. (Morpeth)Warbey, W. N.Williams, W. R. (Heston)
Taylor, Dr. S. (Barnet)Webb, M. (Bradford, C.)Wills, E.
Thomas, D. E. (Aberdare)Wells, P. L. (Faversham)Wills, Mrs. E. A.
Thomas, George (Cardiff)Wells, W. T. (Walsall)Wilmot, Rt. Hon. J.
Thomas, I. O. (Wrekin)Wheatley, Rt. Hon. John (Edin'gh, E.)Wilson, Rt. Hon. J. H.
Thomas, John R. (Dover)White, H. (Derbyshire, N. E.)Wyatt, W.
Thurtle, ErnestWhiteley, Rt. Hon. W.Yates, V. F.
Titterington, M. F.Wigg, GeorgeYoung, Sir R. (Newton)
Tolley, L.Wilkes, L.Younger, Hon. Kenneth
Tomlinson, Rt. Hon. G.Wilkins, W. A.
Ungoed-Thomas, L.Willey, F. T. (Sunderland)TELLERS FOR THE AYES:
Vernon, Maj. W. F.Willey, O. G. (Cleveland)Mr. Popplewell and
Viant, S. P.Williams, D. J. (Neath)Mr. Richard Adams.


Agnew, Cmdr. P. G.Gridley, Sir A.Peto, Brig. C. H. M.
Assheton, Rt. Hon. R.Grimston, R. V.Pickthorn, K.
Astor, Hon. M.Hare, Hon. J. H. (Woodbridge)Poole, O. B. S. (Oswestry)
Baldwin, A. E.Harris, F. W. (Croydon, N.)Prescott, Stanley
Birch, NigelHarvey, Air-Comdre. A. V.Raikes, H. V.
Boles, Lt.-Col. D. C. (Wells)Hinchingbrooke, ViscountRamsay, Maj. S.
Boothby, R.Hogg, Hon. Q.Rayner, Brig. R.
Bowan, R.Hollis, M. C.Roberts, Emrys (Merioneth)
Bower, N.Hope, Lord J.Ropner, Col. L.
Boyd-Carpenter, J. A.Howard, Hon. A.Ross, Sir R. D. (Londonderry)
Braithwaite, Lt.-Comdr. J. G.Hulbert, Wing-Cdr. N. J.Shepherd, W. S. (Bucklow)
Buchan-Hepburn, P. G. T.Hutchison, Lt-Cdr Clark (Edin'gh, W.)Spearman, A. C. M.
Bullock, Capt. M.Hutchison, Col. J. R. (Glasgow, C.)Stanley, Rt. Hon. O.
Butcher, H. W.Lancaster, Col. C. G.Stoddart-Scoot, Col. M.
Butler, Rt. Hn R. A. (S'ffr'n W'ld'n)Legge-Bourke, Maj. E. A. H.Strauss, Henry (English Universities)
Challen, C.Linstead, H. N.Stuart, Rt. Hon. J. (Moray)
Channon, H.Lipson, D. L.Sutcliffe, H.
Clarke, Col. R. S.Lloyd, Selwyn (Wirral)Taylor, C. S. (Eastbourne)
Conant, Maj. R. J. E.Low, A. R. W.Teeling, William
Corbett, Lieut.-Col. U. (Ludlow)Lucas, Major Sir J.Thomas, J. P. L. (Hereford)
Crookshank, Capt. Rt. Hon. H. F. C.Lucas-Tooth, Sir H.Thorneycroft, G. E. P. (Monmouth)
Cuthbert, W. N.Macdonald, Sir P. (I. of Wight)Touche, G. C.
Darling, Sir W. Y.McFarlane, C. S.Turton, R. H.
De la Bère, R.Maclean, F. H. R. (Lancaster)Wadsworth, G.
Digby, Simon WingfieldMacmillan, Rt. Hon. Harold (Bromley)Wakefield, Sir W. W.
Dodds-Parker, A. D.Manningham-Buller, R. E.Walker-Smith, D.
Dower, Col. A. V. G. (Penrith)Marples, A. E.Ward, Hon. G. R.
Drewe, C.Marsden, Capt. A.Webbe, Sir H. (Abbey)
Eccles, D. M.Marshall, D. (Bodmin)Wheatley, Colonel M. J. (Dorset, E.)
Elliot, Lieut.-Col. Rt. Hon. WalterMarshall, S. H. (Sutton)Williams, Gerald (Tonbridge)
Erroll, F. J.Mellor, Sir J.Willoughby de Eresby, Lord
Fletcher, W. (Bury)Molson, A. H. E.York, C.
Fraser, H. C. P. (Stone)Neven-Spence, Sir B.Young, Sir A. S. L. (Partick)
Fyfe, Rt. Hon. Sir D. P. M.Nicholson, G.
Galbraith, Cmdr. T. D. (Pollok)O'Neill, Rt. Hon. Sir H.Brigadier Mackeson and
Galbraith, T. G. D. (Hillhead)Osborne, C.Lieut.-Colonel Bromley-Davenport.
George, Lady M. Lloyd (Anglesey)Peake, Rt. Hon. O.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

I want to raise one point on this Clause. The complexities of construing this Clause are very great indeed, and if one looks at subsection (9), which says:

"This section shall be construed as if it were contained in Part III of the Income Tax Act, 1945.…"
one sees how difficult it is for people to follow through this Act. The taxation is first based on the Income Tax Act, 1918, and then followed subsequent enactments and a special ruling from Somerset House. This shows the reason why the labours of the hon. and learned Member for East Leicester (Mr. Donovan) are both so arduous and so lucrative. It shows how difficult these things are. It is high time we had a consolidation Act.

10.45 p.m.

I want to ask the Government whether they will publish the Report of the Departmental Committee upon which this Clause is founded. It is of great interest to a British mining company to know what view the Government take about the handicaps, if I may use that word, put upon our companies in the way of taxation, particularly compared with the mining companies of other countries. I presume the Departmental Committee went into all that fully, and I think it would be in the public interest if we could see their report.

I think the Committee ought to realise that, even if Clause 18 had been amended as we wished to amend it, British companies still would be under a substantial handicap compared with those of the United States or Canada. Both Canadian and American companies enjoy what is generally known as a straight depletion allowance. They get a percentage of their profits, calculated I presume on the notional life of the mine, allowed completely tax free, and they get it every year. I can see some objections to that form of allowance, but none the less it is an advantage to other mining companies compared with ours.

Of course, there is a further general advantage enjoyed by United States and Canadian companies in the standard rates of tax obtaining in those countries, which are much lower than ours. Roughly speaking, they pay 8s. in the pound, whereas our companies will pay 11s. in the pound. In other words, in this very risky business they can keep almost half as much again of their winnings as our companies. That just happens because our level of taxation, as we were discussing earlier today, is much heavier than that in other countries. All this is important if we are to maintain our place in the world. We have to develop these overseas sources of raw material and of income.

I should like to draw the attention of the Committee to the fact that, even with the concessions in this Clause, British companies, mining and oil, still suffer a handicap, and it may well be that, if the dollar crisis develops with great seriousness, the Committee in future years will have to consider ways of equalising the burdens upon British companies with those sustained by foreign companies. In the United Kingdom we are not now in any position to work under handicaps compared with the companies of other countries, and I feel that we have not heard the end of this mining tax. I should be grateful if the Government could see their way to publish the Report of the Department Committee.

I am afraid that I cannot give any undertaking with regard to the publication of the Departmental Committee's Report. The Report which I referred to has been long published. The Royal Commission's Report contained the principles I was seeking to expound, and has no doubt been in the hands of hon. Gentlemen who are interested in this aspect of taxation. Beyond that I cannot go, and I cannot give an undertaking with regard to another publication on this matter.

With regard to the observations of the hon. Member for Flint (Mr. Birch), it is unfortunate that this kind of legislation is of necessity extremely complicated. We are anxious that it should be simplified as much as possible, and made as comprehensible and easily accessible as can be to the ordinary citizen. It is a tremendous task, and we are fully aware of the difficulty the ordinary citizen has in understanding the legislation. One has to bear in mind that it is primarily designed for the use of accountants and expert advisers, who normally would be concerned with the actual working out of the tax legislation. We will, however, bear in mind the observations made with regard to the Clause.

The right hon. and learned Gentleman might at least give some reasons for refusing the request of my hon. Friend the Member for Chippenham (Mr. Eccles). My hon. Friend asked, not for the expenditure of large sums of money, but for the publication of a Report which might be of great interest to the people concerned in this technical matter. I think that if a request of this kind is to be refused, it should be refused for adequate reasons.

We can understand that neither the right hon. and learned Gentleman, nor even the Financial Secretary to the Treasury, nor indeed, the Economic Secretary to the Treasury, or all three of them are, in the absence of the Chancellor of the Exchequer, in a position to give us any definite assurance on this or any other point. I think we are entitled to know whether there is any real reason why the publication of this Report should be refused and, if there is any real reason, we should be perfectly satisfied by an assurance from one of the three right hon. Gentlemen that the matter will be represented to the Chancellor of the Exchequer and that, in due course, we shall hear from him.

I think my right hon. and learned Friend gave a perfectly straightforward answer to this query. He said that he could give no undertaking on this matter, and by that he implied that the matter would be considered—[Laughter.] The vacant laughter of right hon. and hon. Gentlemen opposite sometimes is such that it makes one wonder whether there is not a good deal of truth in all one hears about their mental capacity.

The right hon. Member for West Bristol (Mr. Stanley), knows very well that the report of a Departmental Committee is not usually published. The membership of such a committee is made up of officials and civil servants who are the administrative members of the Departments concerned and normally the interchange of view between representatives on these committees does not lend itself to the issue, in a proper official form, of an extensive report. What they do report is sufficient to the Government which has set up the committee. The Government can act on the information which the committee supplies and on the recommendations which it might make.

The Departmental Committee to which reference has been made is one of that kind. Nevertheless, I will report to my right hon. and learned Friend the Chancellor of the Exchequer the request that has been made tonight, and although I think it unlikely, in view of the make-up of the committee, that the report will be published, if the information can be given I am sure he or the Government will be pleased to give it either by placing it in the Library or by publication in some other form.

I am grateful to the right hon. Gentleman for going as far as he has gone. Much time might have been saved if the Solicitor-General had anticipated his right hon. Friend by going as far as that. It is impossible to read into the Solicitor-General's answer what we are now to understand was implicit in it; that he would refer the matter to the Chancellor of the Exchequer. In regard to one part of the Financial Secretary's speech, I would urge on him a little caution. He must not mistake the reasons for the extreme kindness with which we always treat him. I would urge on him, when he comes to intellectual capacity and comparisons of the kind he was making, that a man who lives in a house of such extremely brittle glass should not only avoid throwing stones, but should be equally careful to avoid throwing cotton wool.

Question put, and agreed to.

Clause ordered to stand part of the Bill.