Wednesday, 23 June 2010

Tory breach of contract on capital gains tax

The Lib Dem-Con coalition agreement states: "We will seek ways of taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities." The Treasury's budget report states: "Effective from 23 June 2010, capital gains tax will rise from 18 to 28 per cent for those with total income and taxable gains above the higher rate threshold... Basic rate taxpayers will continue to pay an 18 per cent rate on their gains. The 10 per cent capital gains tax rate for entrepreneurial business activities will be extended from the first £2 million to the first £5 million of qualifying gains made over a lifetime... The 50p rate of income tax took effect from April 2010 and will remain in place for the time being."
Spot the difference? Of course you do. This means that the Tories have already reneged on the coalition agreement for the sake of their friends the haves, and will do so again if allowed to get away with it. Meanwhile social services are slashed, so that elderly and vulnerable people who yesterday were acknowledged to need such services are today told they can't have them any more, which makes me choke. This feeble move on CGT is contrary not only to the coalition agreement but also to the advice of former Tory Chancellor Nigel Lawson who on the CGT rates question advocates reversing the economically unsound meddling of Gordon Brown. In this Lawson agrees with Saint Vince of Twickenham, a voice of sanity on this question regrettably unheard as he is silenced by loyalty and by parliamentary convention in his role as business secretary (though he ought to be chancellor).
What's to be done? My suggestion is that the Lib Dem leadership should find their backbones, which seem to have deserted them recently, and start playing the cards the electorate has dealt them, by which I mean the 57 Lib Dem MPs' votes, to see off the Tory right. Where are the Tory right going to go if they don't get their way?