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Capital gains tax increase could cost jobs

The UK government is today said to be reviewing the proposed increase in capital gains tax amid concerns it could cost up to 61,000 jobs and up to £4 billion. These figures have been calculated by the Adam Smith Institute, a financial think-tank, and now offer something of a very real problem for David Cameron and his government colleagues.

It is well known now that the Liberal Democrat party is the major driving force behind the proposed increase in capital gains tax from anywhere up to 50% from the current 18% figure. In public David Cameron has been very supportive of the proposal, predominantly because it was a main element of the coalition agreement, but behind-the-scenes there is concern about a growing backlash from both Conservative and Labour MPs.

Initially the government stance in relation to the proposed capital gains tax change was very firm but over the last few days we have seen this soften slightly. Many believe that, while a U-turn is out of the question, the UK government is now looking to water down the initial hard-hitting proposals. Quite how this will end up remains to be seen but the fact it could cost thousands of jobs and put the UK economic recovery at risk is something which David Cameron is now only too well aware of.

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