A bold proposal for changes in capital gains tax

A bold proposal for changes in capital gains tax


When Chancellor Alistair Darling introduced the flat rate 18% capital gains tax (CGT) at the beginning of this year, it was branded by some as “incredibly short sighted.” 

Many enterprising individuals looking to build businesses feared the change would encourage entrepreneurs to take their money abroad to set up companies. 


But now some financial figures are proposing a brand new policy on the controversial tax.


Basing CGT on the amount of time an asset is held for is not a new concept, but it has now been re-branded to combat the damaging effects of short-selling. The proposal would mean that people who sell assets within months of buying them must pay a higher CGT, up to 50%, to discourage the “spivs and speculators” who have been accused of driving certain institutions into the ground.


However, those who hold onto an asset for five years or more would pay a reduced CGT of around 10%, therefore encouraging investors to create wealth in the country and build up profitable companies, in turn, strengthening the economy.


Government and economic short sightedness has gotten us into trouble recently, arguably playing a large role in the financial crisis, so now, some are arguing, seems like the time to implement changes that would encourage British entrepreneurs and boost the economy in the long term.


But could it work?


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