By Jason Theodorou
Former Cabinet minister John Redwood has added to the pressure on David Cameron to curb a planned raise in Capital Gains Tax, insisting that it would ‘send a strange signal’ if the coalition government raised a tax rate that had been set by the previous Labour administration.
Prime Minister David Cameron has proposed a raise from the current 18%, to facilitate an increase in the threshold for income tax. The government initially promising to set the rate at the same level as income tax rates, but the move remains unpopular amongst high earners.
Redwood wrote today in an open letter to the Treasury that he was in favour of taxing annual profits at the top rate, but disapproved of plans to tax assets such as second homes. He said that the government needs to provide ‘reasonable freedom for people to invest...who make provision for their families and futures’. He said the current plans would harm ‘anyone who saves, or is prudent, or ventures money for the greater good’.
Redwood put forward a system where those who have held assets for a substantial amount of time would benefit from ‘taper relief’, where tax would decrease in annual increments until there were ‘no capital gains after five years’, to send a global message that ‘the UK is back in business’ as a country of investment.
The Prime Minister’s spokesman said: ‘The position on Capital Gains Tax is that there will be an announcement in the Budget’.
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