UK CGT could be worst in the Western world
If the UK government goes ahead with plans to increase capital gains tax to potentially 40% or higher this will see the UK with the highest capital gains tax levy in the Western world. This is a situation which was inconceivable just a few weeks ago with the conservatives apparently heading for a majority in the House of Commons. However, the introduction of the Liberal Democrats to the mix has muddied the waters somewhat and David Cameron has been forced to look at tax rises which he would not normally have considered.
It is believed that the Liberal Democrat party is behind the proposed increase in capital gains tax from 18% to potentially 50% although this is causing significant friction amongst David Cameron and his fellow Conservative MPs. There is no doubt this is something of a coup for the Liberal Democrat party and allows them to flex their muscles in public and show that David Cameron has been forced to backtrack on various central Conservative policies to gain control of parliament.
The PM is very definitely stuck between a rock and a hard place and it will take some very clever negotiating to come out of this with his head held high and his reputation intact.
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