Taxation: Capital Gains Tax

Lord Forsyth of Drumlean Excerpts

Tuesday 7th July 2015 Lords Chamber

[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.