Daily Express: Tax rise to cut revenue

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22 May 2010

THE plan to raise capital gains tax will cut revenue for the Treasury, a think-tank warned yesterday.

The Adam Smith Institute said increasing CGT would widen the UK’s deficit rather than narrow it.

The new coalition government has agreed to tax non-business capital gains at rates “similar or close to those applied to income” meaning CGT could soar from its current level of 18 per cent to 40 or 50 per cent, depending on the level of income tax people pay.

But in a report the ASI said investors believed the measure would be temporary and would defer capital gains realisations until the rate fell again, leading to a “sharp decline” in tax revenues.

The Treasury said: “There are a range of possible options to fulfil this aim on capital gains tax and no decision has yet been taken.”

Published in the Daily Express here.