A FLOOD of support poured in from readers over the weekend after the launch of City A.M.’s campaign against the coalition government’s plans to hike capital gains tax (CGT).
Keith Harris, the boss of stockbroker Seymour Pierce, added his name to the list of supporters, which also includes Tullett Prebon chief Terry Smith, entrepreneur Luke Johnson and private equity guru Jon Moulton.
“The UK is desperately trying to move out of a debilitating recession and the economy needs substantial capital investment,” Harris told City A.M. “We should be incentivising entrepreneurs and risk-takers, not introducing a punitive tax to deter them.”
Others also flocked to show support, including Cornhill Capital co-founder James Almond, Allied Irish UK corporate tax director Damon Lambert and Prupim director Edward Sellick.
City A.M. believes linking CGT to income tax rates would unfairly punish private investors and would prove catastrophic for UK enterprise. Instead, we support the system of tapering CGT rates over time, taxing gains of under one year at 40 per cent and then reducing the rate every year until a zero per cent tax on gains takes effect after five years.
Meanwhile, the Treasury is working on a range of concessions that would make the hike more palatable for Tory backbenchers, who are up in arms over the proposals.
City A.M. understands that plans to lower the threshold at which someone starts paying capital gains tax from £10,000 to £2,500 have now been shelved.
And a 50p top rate of CGT has also been discounted by the chancellor, on the grounds that the Tories have always said they dislike the 50 per cent top rate of income tax but must live with it because of the state of the public finances.
Treasury sources insisted that the changes were being introduced to stamp out tax avoidance. A taper scheme would stop people disguising income as capital gains while rewarding entrepreneurs.