I’ve been tweeting about Labour’s proposed CGT.
- Nats are scaremongering on Capital Gains Tax. Making up a bogie, pointing at it histrionically, and trying to alarm people.
- Standard way to form tax law is to work out broad outlines of policy, then officials work up the details. #CGT
- Broad outlines of Labour’s CGT – second properties will be subject to CGT when they are sold. Family home will be exempt #CGT
- One possible model is Australian. Selling house triggers a CGT event, but exemption can be claimed for “main residence”. #CGT
- If you inherit a house, then CGT would apply from date of acquisition until when you sell. #CGT
- Exact “time of acquisition” a fine detail to be worked out as part of tax policy process. Bog standard way of drafting law. #CGT
- CGT would only apply when assets are sold. So seller will have cash in hand to pay tax. #CGT
- CGT is set at low rate of 15%, to allow for effect of inflation. #CGT
- Other OECD countries manage to run sound CGT rules. We can too. #CGT
- Lots of reasons to have a CGT. One I like most is fairness. Income earned quickly as salary and wages is taxed. #CGT
- But income earned slowly as capital gains is not. Seems prima facie unfair. #CGT
- We draw an artificial distinction between “capital” and “revenue” / slow earned and quick income. CGT will redress that a little. #CGT
- Standard part of law making process is to sort these details out. Basic principle: selling assets attracts CGT (1/2) #CGT
- But there are some exemptions, including family home. (2/2) #CGT