One of the UK’s leading academics has backed the government’s capital gains
tax raid on shares, second homes and buy-to-let properties.
Professor Michael Devereux of Oxford University said the
tax rise on non-business assets should not match the rate of income tax, but
also not be mitigated with taper relief.
“In particular, some argue that the rate should be tapered – that is, it
should fall the longer an asset is held,” said Professor Devereux in a briefing
note for Oxford University’s Centre for Business Taxation.
“However, these arguments are not convincing.”
Devereux said there was “no clear economic benefit” for encouraging investors
to hold assets for longer periods.
“The value of a financial asset depends on the income stream expected to be
generated by the asset,” he added.
“Existing owners have an incentive to maximize this expected income stream at
all times, and this is unaffected by the time the asset is owned.”
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