My colleagues on the finance bill committee have vigorously opposed capital gains tapering.
The government’s aim is to squeeze out short-termism and encourage people to hold assets for longer. Thus the taper penalises short-term disposals and rewards the holding of assets for more than ten years.
In a modern, flexible economy, it makes no sense to distinguish between short and long-term gains.
Short-term gains are often beneficial, and the tax system should not discriminate between the two.
The proposed changes will also benefit rich and large businesses at the expense of small businesses. Indeed, as one tax consultant revealed, the change effectively hands massive tax bonuses to the partners of Goldman Sachs (and the Paymaster General Geoffrey Robinson), while reducing the retirement relief for hard-won gains for small businesses.
The imbalance was neatly summarised by John Burnett, MP for Torridge and West Devon: ‘The proposal is a bonanza – a lottery win – for the wealthy. But it will penalise small business people.’
Dr Vince Cable, MP for Twickenham, called on the government to postpone the proposals for a year and consult widely to avoid damaging small businesses and direct, rather than institutional investment, while only making big business and the readership of this magazine richer.
Malcolm Bruce is Liberal Democrat MP for Gordon and the party’s spokesman for Treasury affairs
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