David cameron is under huge pressure to make concessions over capital gains tax (CGT) . And there is every sign he will give in to the demands from the wealthy.
CGT is not paid by the vast bulk of the population. It is levied mainly on gains from property and share dealing. Last year fewer than 150,000 people paid it—less than 0.25 percent of the population.
Cameron announced proposals to raise the tax rate from 18 percent to 40 percent when he set up the coalition with the Lib Dems.
It is a disgrace that the rate was ever as low as 18 percent. But the idea of raising it sent the rich into apoplexy.
Some 60 Conservative MPs warned chancellor George Osborne against the move.
Tory MP John Redwood, who has led the rebellion over the plan, said low CGT rates “send a message to those prepared to take action to forego consumption to save for a rainy day or save for a difficult time in their families’ lives”.
This ignores the reality of who the tax affects.
CGT is only paid if someone makes more than £10,100 a year profit from shares or property dealing.
It does not apply to someone selling their main home or private car.
The main groups it hits are owners of second (or third or fourth) homes, parasitical buy-to-let landlords, and people with lots of shares. It is the tax that so many MPs were found to have evaded by “redefining” their main home during the expenses scandal.
CGT should not just be raised to 40 percent, it should be much higher!