Taxation: Income Tax

Lord Forsyth of Drumlean Excerpts

Monday 24th June 2013 Lords Chamber

[Lord Newby]

The absolutely bald point that lay behind the question of the noble Lord, Lord Eatwell, is that when you do this kind of thing at the top end of tax rates, very well-off people take evasive action. That is why it is an ineffective way of raising additional amounts of money. People do not just sit there and pay the tax: they forestall it, postpone it and avoid it. This is why it was a very ineffective way of trying to raise additional funding.

[Lord Forsyth of Drumlean]

My Lords, can my noble friend tell us what the effect was on revenue of increasing the rate of capital gains tax?

[Lord Newby]

My Lords, I do not have that figure immediately to hand, but it was very significant. It was more than the potential loss of revenue from reducing the top rate of tax.