(9 years, 4 months ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Lee of Trafford
To ask Her Majesty’s Government what is their estimate of how many taxpayers will pay capital gains tax in this financial year, and how much this will contribute to the public purse.
The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)
My Lords, the latest published estimate of the number of taxpayers liable to capital gains tax is for 2012-13, when there were 169,000 such taxpayers. CGT receipts amounted to £5.6 billion in 2014-15, the latest year for which figures are available. Forecasts of receipts published by the Office for Budget Responsibility amount to £6.5 billion for 2015-16.
Lord Lee of Trafford (LD)
My Lords, in reply to the Oral Question yesterday from the noble Baroness, Lady Wheatcroft, the Minister said:
“The Government are considering what steps are appropriate to make further progress in shifting the culture of equity markets towards long-termism”.—[Official Report, 6/7/15; col. 5.]
May I suggest that one obvious step for a blue budget—or, indeed, a budget of any colour—would be to bring in a differential between short-term and long-term gains, taxing short-term gains at an individual’s top rate but with tapering rates for longer-term gains? Would not this approach, as supported by most genuine investors and the Quoted Companies Alliance, be more equitable, likely to deliver greater revenues for the Exchequer and, above all, in the national interest as well?
Lord Bridges of Headley
My Lords, I hear what the noble Lord is saying and I tread with some trepidation here as we are on the eve of the Budget. However, what I will say is that while previous CGT has had a taper or been indexed to favour long-term holdings, such an approach would lead to the reintroduction of significant administrative burdens for many CGT payers. It would bring significant complexity into the tax system and the wider economic impacts would have to be assessed.
Lord Forsyth of Drumlean (Con)
My Lords, given that when the coalition Government increased the rate of capital gains tax by 10%, the revenues went down, and when they cut the top rate of income tax by 5%, the revenues went up, what conclusions does my noble friend draw about opposition tax policy?
Lord Bridges of Headley
I draw a number of conclusions, my Lords. Overall, the Government believe that the current top rate of CGT at 28% is a good balance between raising revenue, reducing the incentives to substitute income for capital gains and retaining incentives to save and invest.
Lord Foulkes of Cumnock (Lab)
My Lords, further to the question of the noble Lord, Lord Forsyth, what are the Government doing to make sure that people liable for capital gains tax are paying it?
Lord Bridges of Headley
My Lords, as your Lordships will know, during the last Parliament this Government took a number of steps to tackle avoidance and evasion. Indeed, they were relentless in their crackdown on tax avoidance. HMRC will have secured £100 billion in compliance yield. This includes more than £31 billion from big business and £1.2 billion extra from the UK’s richest people.
Baroness Kramer (LD)
May I press the Minister? If the Government are seeking to provide support to working people, will it not be appropriate to begin to align capital gains tax rates with income tax rates, especially for these large, short-term capital gains?
Lord Bridges of Headley
The noble Baroness makes an interesting point. As noble Lords know, this Government are intent on helping working people. Last year, we cut income tax for more than 26 million people, took more than 3 million out of income tax altogether and created more than 1,000 jobs every single day. This Government intend to do better still.
Lord Flight (Con)
My Lords, I recollect that, for an asset which has been held for a long time, the base value can be uprated to that which applied in, I think, 1983. However, inflation has made a nonsense of that. Will the Government look at changing the date at which long-held assets are rebased for cost purposes?
Lord Bridges of Headley
I hear what my noble friend is saying. However, I tread with extreme trepidation and say that decisions on that matter are for the Chancellor to announce at the Budget.
Lord Davies of Oldham (Lab)
My Lords, the House will have noted the Minister’s sensitivity about making comments on tomorrow’s Budget. That is not the kind of thing which inhibits the Chancellor, and therefore I am not inhibited either. I think he has made clear that he is not going to increase income tax or national insurance contributions. As the Minister said, it is unlikely that capital gains tax will be greatly affected, although he is not quite sure about that. Is it not quite clear that the Government’s strategy is in fact not to be fair about taxation but to be brutally unfair about welfare expenditure?
Lord Bridges of Headley
No, I reject that utterly, I am sorry to say, my Lords. As the noble Lord will know if he has read the Conservative Party manifesto, the Government are committed to cutting income tax for 30 million people, taking everyone who earns less than £12,500 out of income tax altogether. As I alluded to, we intend to surpass what we did in the previous Government and help businesses create more than 2 million new jobs. That is the best way to tackle poverty and disadvantage in this country.
Lord Brabazon of Tara (Con)
Does my noble friend recall that, when capital gains tax was first introduced many years ago, there was a rate for exactly one year that you had to pay on income tax rates and after that it became 30%, which is the sort of suggestion that the noble Lord, Lord Lee, was making. That was a disaster, actually, and resulted in significant distortions in the market. It would be a disaster to move back to that idea.
Lord Bridges of Headley
My Lords, the Government believe that the current structure of CGT balances the need for simplicity alongside fairness by having three effective rates, which provide a lower rate for basic-rate taxpayers and support for entrepreneurs, alongside the main rate. At that, I am going to stop.
Lord Brooke of Sutton Mandeville (Con)
My Lords, I declare an interest as somebody who paid capital gains tax last year, having already made it. I am prepared to volunteer through my noble friend to teach the noble Lord, Lord Foulkes, first, how to make a capital gain and, secondly, how he declares it for tax.
Lord Bridges of Headley
I look forward to that great contribution, my Lords.
Lord Berkeley (Lab)
My Lords, given my noble friend’s question on tax avoidance and the Minister’s answer, how can he link this with the fact that the Inland Revenue has just lost 20% of its staff?
Lord Bridges of Headley
My Lords, I know that my right honourable friend the Chancellor will continue to ensure that HMRC has the assets and resources at its disposal to do what is required.