Tuesday, May 18, 2010

The true colours start to shine through

It's hardly a new generation of government when one wakes up to this sort of nonsense
Darling George, the man who probably does have actual wallpaper on his computer screen, the man who is ill equipt to be in charge of our economy at this important time, has told his core voters that he wishes to shaft them.

I think it would have been pretty clear for anyone coming into office that there was a substantial problem with capital gains tax and avoidance of income tax,' Mr Osborne said.

Reform of capital gains tax was unavoidable because of the 'enormous amount of income shifting' happening by people looking to avoid paying income tax, which currently attracts much higher rates

Fundamentally, Georgy, people don't like paying tax because they see how much money pointless twats like you waste. You've been in power long enough to send out a note to local councils informing them that you won't be funding cycling workshops or lesbian tea dances and yet all I've really heard is that the so called Conservative Party has jumped into bed with their coalition partners with the enthusiasm that the builder's son who secretly dressed up in his mum's clothes does with the first pretty boy he meets at university.

It was always there for it to be this keen.
But the original Tory commitment that 80 per cent of deficit reduction should be achieved through spending cuts and just 20 per cent through tax hikes has been quietly abandoned.

Brilliant. The party which came third is successfully trying to ruin our economic recovery. Of course, if the Tories actually had a backbone or even an inkling of economic nous they would tell Cleggy to shut his pretty mouth and let them get on with the job of trying to dig this country out of the ghastly mess which socialism and neglect has brought.

But they're not. They could have stood with no UKIP candidates if they'd trusted the people enough to give them a referendum on our continued membership of the European Union, which would do a damned site more for the economy than a rise in VAT (which brings them in line with other EU countries and of course is a way that the EU gets money without asking national governments for it) but they declined.

Yet Osborne might have problems with his proposed rises, as a reader writes to me to say:

'I’ve heard your policy on raising the rate of CGT from 18& to 40% on more than three occasions from yourselves & your local candidate.

I’m giving you the benefit of the doubt & assuming that you are not aware why the rate has been ‘lowered’ to 18%; either that or I am missing something which means that
three of you have not described your proposals properly, or you are proposing to commit theft.

I don’t support your party; I’ve met Vince at Guildford Theatre last year; you both seem to be very able politicians & decent people which is why I’m puzzled by your proposals re CGT.

Canvassing for my party I’ve found that few members of the public understand what the deficit is; how much we owe: what Gordon Brown means by saying he’ll halve the deficit etc.

To them, your proposal to charge ‘rich’ people 40% on capital gains must sound attractive – it may well win votes.

The thing is you’d be challenged in the courts if you tried to do this. Let me explain simply CGT has always been complicated:

  • CGT was introduced some 40 years ago as Sch.D case VIII.

  • In the early days, in order to establish & quantify a gain, tax consultants and HMIT had to resort to opinions from valuers etc. this could be a time consuming, costly process

  • There have always until recently (with the introduction of the flat 18% rate) been problems associated with establishing the true gain, i.e after allowing for inflation.

  • Let us assume that I bought a second home 10 years ago for £100,000. I could have bought a Rolls Royce for that but I chose the house.

    Let us also assume that inflation/indexation would have increased the value to £130,000 and that I sell the house tomorrow for that figure.

    Under present rules, after deducting the annual tax free allowance (say £10,000) I’d pay CGT of 18% on £20,000 i.e £3600. It is arguable whether I actually made any gain, and my Roller would still cost £130,000, but at least the calculation is simple.

    Under your proposals (as I understand them), you’d reduce the annual allowance to £2,000 leaving a chargeable gain of £28,000 on which I could pay tax at 40%.

    Thus my CGT liability could be £11,200 on a gain that, as a result of inflation, did not actually occur. That would not stand up in court if challenged.

    Vince said today that very few pensioners would actually pay 40% CGT. That is not true. There are thousands of people who’ve invested in second homes for their retirement or student homes for their children or grandchildren, who will not be reliant on state handouts, who you are proposing to rob, if my understanding of your proposals is correct (I apologise if I’m wrong)

    I look forward to your reply and, if appropriate, to a public withdrawal from an unfair (you being the party proposing fairness) tax.'

    This letter was originally written to the Lib Dems during the election but I think given this new state of affairs it's worth flagging up to Mr Osborne.

    Gentlemen; we won't hold our breath.

    1 comment:

    Anonymous said...

    You feature the quick return to punitive taxation by stealth taxes Trixy and today I featured the quick return to control freakery.

    Between us I think we're shot down this talk of change and new ways of doing politics...

    Quick Return To Control Freakery