Darling could backtrack on capital gains

Taper Relief

How did Darling (ie. Gordon) manage to get rid of the only thing that makes CGT make sense - taper relief?

Taper relief rewards longer-term investment, and discourages fee-generating 'churn'. All taxes distort behaviour, but at least taper relief does it in the most constructive way for long-term business/investment planning.

Instead - by removing taper relief - Darling-Brown has sent a curious message: on one hand, people who have made a killing through buy-to-let capital growth are going to be given an extra 30% of these hardly productive gains when they sell (ooh - what do you think that will do for affordable housing, eh?).

On the other hand, there is now far less reason to build businesses for the future - or indeed, to make any long-term business/investment plans, since we now have no way of predicting what this inconsistent government will do next.

There's a huge difference between simplifying the tax system - the complexity of which Gordon himself is mostly responsible for - and producing a simplistic tax system.

A more logical government would extend taper relief to more areas. For example, it's crazy to have incremental tax (stamp duty) on selling a house: the next seller will simply add the 'lost' cost onto the new price (again, fuelling house price inflation).

Far simpler to abolish tax exemption for the house you live in, and have Capital Gains Tax on the increased value of your house - but with taper relief to make it negligible after a few years. This would have a stabilising effect on the housing market, and damp excessive price movement.

What?

I am intrigued to know what a fair, simple and COMPETITIVE tax system is.

Who is it competing with? Other governments who want our money? or does it mean there is going to be choices available and we can go for the tax system we as individuals consider to be the best value for money?

@Chris G

Mostly it means a competitive environment for KPMG and the others who make millions off showing the rich how to dodge the tax system.

The tax experts and their clients aren't to blame, by the way. Tax avoidance is by definition legal (as opposed to tax evasion), and I am a firm believer that it is not just the citizen's right but his duty to avoid as much tax as possible. The fault is the government's for creating a complicated tax system. They're not going to do anything about it, of course. Although it costs more to administrate, they don't care because it's not their money. The beauty of a complicated tax system is that *you* pay Gordon Brown so he can take *your* money away to line *his* pockets. So inefficiency isn't a concern for the government. And on the upside, a) you get to create a bureaucratic empire to administer tax, and b) complication breeds uncertainty, and uncertainty breeds fear. Small businesses and the self-employed live in constant fear of a tax inspection.

Now, in a sense there is some real competition - there are certain countries which have moved to a flat tax system, at least with income tax. So you can always move to another country - it doesn't have to be Bermuda, these countries are in the EU and you can move there just by getting a bus ticket and a passport.

Of course, if your Slovakian is a bit rusty, it's not so attractive. And we wonder why the Government doesn't seem too keen on us learning foreign languages.