Capital Gains Tax should be increased to match levels of Income Tax according to the politician described as a “legend” by Prime Minister Andy Burnham.
Lord Neil Kinnock – who last week was told by Burnham that his rhetoric “remains unmatched… in modern politics” – has made the tax hike call on Sky News.
He says: “[The] equalisation of capital gains tax and the rates of income tax, – 20% and 40% and 45% – would raise a very substantial amount, around £12 billion a year.
“And that could make a direct contribution to assisting our national finances with the extra revenue.
“My own preference – and I speak only for myself, I do emphasise that obviously and very emphatically – is that that kind of money from that kind of source is raised in order to fund the development of a national social care service, which we are in dire need of achieving.”
Kinnock adds this would be “very economically positive” but would also “address some of the more fundamental agonies… of people who are having to deal with social care needs because of chronic illness, disability, children with various afflictions, and of course, our ageing population”.
Wes Streeting, who is now the defence secretary, set out plans for a wealth tax that would see capital gains tax equalised with income tax when he was a backbench MP.
A number of bodies back the move.
The Institute for Public Policy Research (IPPR) says aligning CGT with income tax, while scrapping most allowances and reliefs, could raise £90 billion over five years and would be “fairer, simpler and raise revenue.”
Meanwhile the Institute for Fiscal Studies (IFS) says there is a “strong case for reform” and advocates aligning marginal tax rates across all forms of gains and income, while also reforming the tax base.
Finally in 2024 the Centre for the Analysis of Taxation (CenTax) suggested that equalising CGT with income tax could support productivity and growth, and that current CGT rates distort behaviour and encourage less productive investment.
This article is taken from Landlord Today