Is capital gains tax a fair tax?
There is no doubt that capital gains tax will hit the headlines more and more over the next few weeks with rumours of a potential increase from 18% to 50%. However, is capital gains tax a fair tax?
In many ways capital gains tax is seen as a tax against the wealthy but over the last 20 or 30 years this vision has changed somewhat. More and more people in the UK, not necessary high earners or wealthy people, hold shares whether directly or indirectly. As a consequence capital gains tax is by far and away more widespread across the UK population and more and more people will be dragged into the potential increase in this tax on profits.
However, when you consider that without investment in assets and shares in the UK the economy would literally grind to a halt, is an increase really fair? As a consequence of the proposed increase in capital gains tax, the UK government would be taking more and more money from the investment arena thereby reducing investment levels in the medium to longer term. So aside from hitting more people than ever before an increase in capital gains tax could actually lead to a reduction in direct and indirect investments in the UK.
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