Report Finds Scrapping Capital Gains Tax Would Make Families £1,000 Better Off

While Labour continues to reverse its pre-election definition of “working people” to justify tax hikes, the Adam Smith Insitute offers another path for raising money from Capital Gains Tax. Scrap it…

Statistical modelling in the ASI’s new report suggests that national income would grow by £25.08 billion thanks to increased saving if CGT was gradually phased out. Further revenue increases from higher investment and productivity would more than replace revenue lost from CGT and boost growth…

Without Capital Gains Tax national income would, according to the modelling, rise by 0.9% annually, in perpetuity. That’s thanks to a 2.4% increase in national savings as a percentage of national income. Bean-counters will know that two-thirds of the lost revenue from scrapping the tax would be offset by increased revenue from other taxation as a result. Multiplier effects to growth would more than compensate for lost Treasury revenue while every family would be £1,000 a year better off…

Reeves should rule out a rise in CGT in the budget, and better still scrap it altogether. Talk about a rabbit…

mdi-timer 25 October 2024 @ 15:50 25 Oct 2024 @ 15:50 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Labour Completely Changes Definition of ‘Working People’ Before Budget

Once again the No 10 communications operation is breaking down. Starmer told broadcast journalists yesterday night that someone who works and also gets income from shares or property “wouldn’t come within my definition” of a “working person.” Today his spokesman clarified that “a person who holds a small amount of savings in stocks and shares still counts as a working person.Guido cast his mind back to before 5th July, when Labour made a specific pledge in its manifesto: “Labour will not increase taxes on working people”…

These are the definitions of “working people” the public was given prior to the election:

  • Reeves:Working people are people who go out to work and work for their incomes. Sort of by definition, really, working people are those people who go out and work and earn their money through hard work. Some people, who go out to work haven’t been able to build up savings. Many other people who go out to work, have had to run down their savings. But there are people who do have savings, who have been able to save up and those are working people as well.
  • Starmer:  Yes, I’m a working person, I come within my own definition of a working person, which is earning my living, paying my taxes and knowing what it means to save money.
  • Reeves: “Working people are people who get their income from going out to work everyday, and also pensioners that have worked all their lives and are now in retirement, drawing down on their pensions.

Compare that to now, days before the budget.

  • Starmer: “I have in my mind the sort of people that go out, earn their living, have maybe a bit of savings, but not huge savings. And there when things get a bit tough, they can’t simply get a cheque book out and sort of write their way out of the problems that they’re facing. It’s those people that are working hard, saving where they can. Of course, I think most people try to do that where they can, although it’s difficult. But [it’s] the sort of people that have the anxiety I suppose in the bottom of their stomach that should something happen to them or their family, they know they can’t simply write a cheque to get themselves out of any future difficulty. They’re the people I have most in mind when I make the decisions I make.”
  • Bryant: “[Working people] has become a shorthand in political circles for the people who were particularly disadvantaged in the cost of living crisis…that suddenly meant that people had to find an extra £300 a month for their mortgages so those are the people that we didn’t want to hit, so we wanted to say in the general election we don’t want to take more tax from you and that’s what we said.
  • Kinnock: “Obviously the definitions have to be seen in the round and that’s what’s going to be put on the table.”

Spot the difference? They did promise change…

mdi-timer 25 October 2024 @ 14:18 25 Oct 2024 @ 14:18 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Capital Gains Receipts Hit Highest Level Since Financial Crisis in Panic Sell-Off

New data just released by HMRC shows Capital Gains Tax receipts have shot up by 16.3% in the third quarter ahead of the budget. Coming in at £572 million from July to September – compared to £492 million in 2023. Realise your gains, realise your gains…

September’s CGT receipts hit £192 million, which is the highest figure since 2008. Inheritance Tax receipts, boosted by frozen thresholds, hit £4.3 billion between April and September, a 10% increase on the year before. Evidence shows that people actually give up the ghost to avoid the death tax…

Starmer’s personal firefighting over budget speculation on an incoming Capital Gains hike hasn’t worked, then. More evidence of the Laffer Curve in action will likely present itself if Reeves chooses to hike CGT in the budget – HMRC itself predicts a 10% hike would lower revenues by £2 billion. Labour’s tax crosshairs are clearly set on growth-promoting wealth…

mdi-timer 22 October 2024 @ 13:22 22 Oct 2024 @ 13:22 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Minister Hints at Labour Tax Raid on Six-Figure Earners

Care Minister Stephen Kinnock was asked a pretty simple question ahead of the budget this morning: “Are six-figure earners working people?No response – six times in a row…

Kinnock eventually said Labour hadn’t worked out what a “working person” was yet: “Obviously the definitions have to be seen in the round and that’s what’s going to be put on the table.” Rachel Reeves made it clear, though, what the party’s definition of working people was during the election campaign: “Working people are people who get their income from going out to work everyday, and also pensioners that have worked all their lives and are now in retirement.Which obviously includes those who receive a large salary…

Kinnock just said: “our manifesto made it absolutely clear that we will not be raising National Insurance income tax or VAT on working people.A cynical combination of two entirely different sentences in the manifesto…

Streeting said yesterday that Labour’s “focus” when it came to not hiking taxes was on “people who are on lower or middle ­incomes.” It only took a hundred days for Labour to give up its growth-friendly façade…

mdi-timer 21 October 2024 @ 10:01 21 Oct 2024 @ 10:01 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Labour to Reverse Pre-Election Position With Stealth Income Tax Hike

Amid the flurry of pre-budget briefing the FT now reports that Reeves will extend Sunak’s 2021 income tax threshold freeze beyond 2028, when it was due to end. The current threshold freeze will raise more than £33.5bn by 2029 and will drag 3.8 million more taxpayers into the additional rate band….

The stealth tax was a big focus for Labour’s attack operation before the election. Reeves said last year “Labour aims to lift a freeze on tax thresholds that is on track to cost workers on the basic 20% rate of income tax £750 a year each.” The party’s assault on the “25 Tory Tax Rises” singled out thresholds in particular: “Labour has found that Tory stealth tax rises over the next two years have hit the average sales assistant with a £660 tax bombshell.Not only will Reeves not reverse the tresholds – she is specifically set to make the “bombshell” worse for longer…

Labour claims that the manifesto pledges won’t be broken with this because Labour only pledged to keep rates at the same level. The public are sure to be sympathetic…

mdi-timer 18 October 2024 @ 15:51 18 Oct 2024 @ 15:51 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Business Confidence Plummets To Lowest Level in 2 Years Ahead of Budget

Latest figures from the the Institute of Directors have optimism in the economic outlook falling  to its lowest level since 2022. The index took a dive to -38 in September, down from -12 in August…

Confidence in firms’ prospects has also dipped while investment intentions have droppped to their lowest point since September 2020. Directors cite “concerns over likely tax increases, the cost of workers’ rights, international competitiveness,” and “broader cost pressures” in their latest dour assessment of times to come. Reeves’ budget summarised…

Meanwhile the Tories’ £3,500 business day at Conference has received poor reviews with little interest from firms and tickets getting a two-thirds discount at the last minute to egg on interest. At least they didn’t ask for their money back this time…

mdi-timer 1 October 2024 @ 08:40 1 Oct 2024 @ 08:40 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
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