| The question of taper relief |
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| Written by Dr Eamonn Butler | |
| Tuesday, 30 October 2007 | |
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Now, here's a tough one. On the Downing Street website, the petition
opposing the Chancellor's changes to Capital Gains Tax has accumulated
over 15,000 signatures. "We the undersigned," it says "petition the
Prime Minister to Keep the CGT taper relief as a major incentive to
enterprise." Humm. Normally I'm happy to sign any petition opposing anything that politicians do on the grounds that 99 percent of the time I'll be opposing rank stupidity. This one I'm not so sure about. Yes, I'm appalled that thousands of people who have built up a small business and want to sell it and retire in peace will face a rise in their capital gains tax bill. Taper relief meant that up to now, they would pay only 10 percent on the value of the business they had built up: from April they will be paying 18 percent. Not quite a doubling, but an 80 percent rise. But then, I'd like to see a flat rate of capital gains tax, just as I'd like to see a flat rate of income tax. The complexities of these taxes has led to avoidance and evasion, making investment less efficient, discouraging people from work, and causing the tax authorities to introduce even more complicated regulations and even more draconian penalties in order to try to make the tax bite as intended. So in fact I'm against taper relief – I'd just like to see a single rate of capital gains tax. But I would do that by bringing the whole lot down to 10 percent. Or less.
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