Friday, May 28, 2010

If the coalition isn't split it should be

Vince Cable claims the coalition is not split over plans to raise capital gains tax to 50 per cent – to which the only answer is that it should be.

What are the Cameroon Liberals playing at? A young entrepreneur told me today: “I feel very strongly about this.

“Eight years ago, I took a risk. I was offered a good, safe, extremely well-paid job but I set up my own business.

“If this tax rise goes through, even if my business goes as planned, I would have been better off taking the safe job – and I wouldn’t have had to spend the last ten years worrying about money and where the next contract is coming from.”

As my friend points out, using CGT to hammer people with second homes and a few shares will only leave them worse off and more likely to become dependent on the taxpayer in their old age.

Meanwhile the major buy-to-let landlords can afford clever advice to make sure they get registered abroad and probably don’t need to worry about tax at all.

There is a terrible irony here. It was a Labour Government which cut capital gains tax to 18 per cent only to discover the reduction was being abused by the very rich, who converted income to capital.

But it was still a good idea. It may need reform to prevent abuse – such as the re-introduction of a taper so you can’t cash in on short-term investments.

The point has to be, though, that long-term investment and entrepreneurial risk-taking must be encouraged by the tax system – not punished.

And if the Conservatives in Cameron’s coalition don’t understand that then we might just as well have voted Liberal in the first place.

Much as I loathe Alastair Campbell, it was pathetic of Cameron's "communications team" to refuse to put a Cabinet Minister on BBC's Question Time programme just because the former Labour spin-freak was on it.

Is there nobody in the Cabinet capable of taking him on? Is there nobody willing to defend the Government's first week of work just because there isn't a Shadow Cabinet Minister in attendance?

Much as I loathe the BBC, the corporation was quite right to refuse to be dictated to.

No comments: