Capital Gains tax should be abolished.
Why?
Eliminating it would make Britain a much more attractive destination for investment - both domestic and foreign. It would put us in the same league as Singapore and Dubai (and especially so if we also eliminate Inheritance Tax) as a tax-attractive destination for wealth.
The surge in investment would lead to more growth and jobs, and thus larger tax receipts in the long run.
It would also mean being able to eliminating a whole raft of other exception measures such as EIS/SEIS (tax-efficient schemes to incentivize investment into early stage companies) and simplify accounting for investors overall. This would again boost investment potential.
I can personally attest to the pain caused by having to track and carefully calculate CGT on trades.
Won’t it impact tax revenue?
Capital gains tax raises around 15 billion pounds a year - less than 2% of total tax revenue - and is only paid by 0.65% of British adults, according to the IFS.
Why does it exist anyway?
It was introduced in 1965 by then Labour Chancellor James Callaghan MP, the Chancellor of the Exchequer at the time. The aim was to ensure that income could not be recategorised as capital gains in order to escape paying tax.
This is a valid argument, and yet it’s undermined by the very fact that CGT and income tax differ. Indeed, CGT is lower than the top rate of income tax, meaning that you might as well try to maximize revenue as Capital Gains. In fact, the people who benefit the most from this are wealthier people - who are the ones likely to be paying CGT in the first place.
We already have rules to ensure what is income isn’t classed as a gain (e.g if you trade a few times per year vs regular day-trading), so I’m not worried about this being an issue.
