CGT

Vince Cable is wrong when he suggests that income and capital should be the same.The latter is a tax on risk and a gain cannot be asssured.His proposal is merely an envy tax that will actually see a reduced tax take as in my experience investors are unwilling to take a 40% tax hit.Its hardly promoting savings and investment,but perhaps he would prefer everyone to be on benefits.

Posted by: mark dampier

CGT

Vince Cable is wrong when he suggests that income and capital should be the same.The latter is a tax on risk and a gain cannot be asssured.His proposal is merely an envy tax that will actually see a reduced tax take as in my experience investors are unwilling to take a 40% tax hit.Its hardly promoting savings and investment,but perhaps he would prefer everyone to be on benefits.

Posted by: mark dampier

Fairness in taxation

The principle of equity to which Vince Cable refers is one which the Lib Dems, with their fairness agenda, can be expected to insist upon. If one persons’s wealth increases through taxed income, it is only logical that another’s capital gain should be taxed to the same extent. That apart, government should aim for minimal influence through tax measures on market forces for the good of the economy as a whole. The risk argument Mark Dampier mentions is a fair point, however. There should be an opportunity over a period of, say, five years to offset losses against gains. It should also be possible to slice one’s net gains over a five year period if they are to be added to income for tax calculations. This would, again to be fair, have to be coupled with the drastic reduction in the annual exemption which Vince Cable has argued for.

Posted by: Ragbin

Trust in goverment

Vince Cable's policies were voted into third place by the British electorate, so the very thought that these are now permeating into government is causing real anger among grassroots Conservatives. 16,000 more votes in a few marginals would have given the Conservatives a working majority. For years, whatever political party was in power, trust was built up in government by the inflation linked personal allowance and the idea that CGT should not be a tax on inflation. The imposition of a flat rate of CGT was the beginning of the erosion of trust. The party that did that could only manage a poor second. If Conservatives bring this failed policy (the reduction or abolition of the CGT allowance)into law the anger that many Conservatives are now expressing will - Mervyn King is right - threaten the future of the Conservative Party.

Posted by: Ken Durkin

Trust in government

Leaving aside the politics, Ken Durkin's “tax on inflation” argument is difficult to follow. Say inflation is running at 5% per annum. A and B each invest £100,000 in 2010. A puts his money in a bank account and receives interest of 5% per annum taxed at 40% and reinvests it. B buys an asset which produces no income but sees the value of his investment rise by 5% per annum and pays 40% tax on the gain when he disposes of it in 2020. Who will then be better or worse off? The outcome for each would seem to be about the same.

Posted by: Ragbin