Before the debate was adjourned I pointed out the circumstances in which capital gains tax would arise and how persons would be allowed interest against a capital gain. There are four main ways in which a person could make a capital gain. First, there is the property dealer who purchases property and without doing anything to it, sells it. That will not be regarded as a capital gain. He will be liable to tax under Schedule B and corporation profits tax. Secondly, a person purchases a site, pays architects and takes the risk of building on the site and sells the building to an institution. If the economics of the situation forced him to sell he would be liable to capital gains tax and not to Schedule B tax. If it were a trading company, it would be liable to Schedule B tax and corporation profits tax. That does not arise except where he can prove it was a forced sale. That is where there would have to be some examination.
Thirdly, there is the case where an extension is built to a business structure or works and interest charges in respect of that extension are allowed as a capital expenditure. It might be an hotel or manufacturing business that was extended. The interest charge would be allowed against the profits. If it were sold, interest charges would be allowed and it would be taxed as a capital gain.
The fourth case may be the reason the Minister is catching the whole lot. It is the case where a person gets in quickly and buys up property which is not his home or place of business and sells it at a huge profit. This transaction is liable to capital gains tax. If there is interest payable this would be allowed in the normal circumstances. At the moment the person would be able to get away with it. It is a once and once only profit.
I am not trying to create loopholes or to get the Minister to agree to things that are unfair. The fourth case that I have described is the one that any Minister for Finance would try to catch but in order to catch that case the other three legitimate cases are caught. In fact, the Minister will catch four or five cases instead of the one that he wants to catch. In doing so he will stop development and will create the position that tax of 65 per cent will be payable. This is very wrong. I am not speaking for companies only. There may be a private dealer who purchases property and sells it. He is in the property business. He has to pay income tax and corporation profits tax and sur-tax. I do not think it is right to penalise so many in order to catch one. If the person who moves in, buys property, sells it off and looks for interest charges on it were isolated the matter of allowing interest would be feasible. When I refer to property it can be flats or any type of building or construction. The Minister has promised to look at it. I would like to catch the Smart Alec who comes in and gets away with something but every other straightforward businessman, whether he be a property dealer or something else, who is engaging in this work in the course of his business, should not be victimised. The man who is engaging in this business, if he is a trading company, pays 49 per cent or if he is a property dealer, pays income tax, sur-tax and corporation profits tax. I would like the Minister to consider this very carefully. He is closing one gate and he may get another method of locking that gate without locking the gate to every businessman, property dealer or construction man in the business.