Now that we have the budget out of the way perhaps we can take a moment to reflect on one particular aspect of it.
I found it very disappointing the manner in which the capital gains tax issue dominated thinking almost from the date of the coalition agreement to the date of the budget.
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CGT – Change what change?
What upset and annoyed me was the fact that the Government told us that they were changing the capital gains tax rate possibly to align it, certainly for higher rate tax payers, with the former rate of 40% or perhaps even 50%.
But the Government did not tell us from when the rate was to be changed or what was happening to the annual exemption. We ended up with the worst of all possible worlds.
We knew there was going to be a change in the capital gains tax rate. We did not know from what date it was going to take effect (6 April 2010, budget day or 6 April 2011). We did not know whether there would be any taper or similar relief. We did not know what would happen to the annual allowance.
All of this meant our clients were operating in the semi darkness. We knew there was to be a change but we were told only part of the change. Hence a large number of fruitless telephone calls; “what advice do you give me Mr Shindler?” “None at all. Your guess is as good as mine.”
I refuse to believe that the economy of the country would be put into jeopardy, even in its present impoverished state, if we had been told what the details were instead of announcing part of the story and leaving us guessing as to the rest of it.
The whole business about budget secrecy is of course a nonsense. It is no way to run a civilised country when we try and guess what might be in the budget. At least the November pre-Budget statement gives us a good outline of what is going to happen but there are often surprises of which no one had gambled.
People want certainty in their lives to enable them to plan effectively and efficiently. Would the tax base of the country seriously have been threatened if the CGT reforms had been announced fully? Of course it is distinctly possible that the Government itself did not know what it was doing and having announced one thing was desperately trying to preserve the coalition by not announcing anything else.
And to prove my point the Government has already announced that there is to be a change in the VAT rate and the date upon which that change will come into effect. Now VAT raises vastly more money for the Government than CGT so why can we be told that and not the CGT changes?
If this government wants to retain the respect of its electorates it needs to rethink, and quickly, the way it approaches these issues in the future.
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