Conservative tax policies do not have the best interests of the country in mind, and Labor’s policies are appalling with no awareness of the social consequences
Mr Hunt criticized the inheritance tax as “strongly anti-Tory”, but despite hopes that the Conservative manifesto would abolish the tax, it did not happen. The Conservatives have been the primary ruling party since 2010, and if they wanted to prove that inheritance tax was too anti-Tory, they would have had more than 20 budgets to do so! The problem with campaign politics is that it does not care much about what is in the country’s interest. I would welcome reform of inheritance tax to create a fair rate of tax, because I recognize that the growth in many of our assets such as estates is not only down to us, but also to the economic and infrastructure policies taken by the Government to encourage that growth. .
The Chancellor has stated firmly that the Conservatives will not raise capital gains tax (CGT), stressing their goal of “encouraging people to earn and save.” Ironically, the Conservatives reduced the annual CGT relief amount from £10,100 in 2010/11 to £3,000. Today, they have also frozen personal allowances, and private landlords, already struggling with rising interest rates, will not be encouraged to sell and will be forced to raise rent to pay the more expensive mortgage on top of that, by being unable to sell or pass on to their children Of Millennials/Gen Zers during their lifetime, this forces them to hold on to the property until they die, at which point they will suffer the higher inheritance tax of 40% on market value versus the lower maximum CGT rate of 28% on gains only Mr Hunt seems to suggest And his colleagues did just the opposite in that they helped facilitate the transfer of wealth to Millennials and Generation Z, who I believe have a greater opportunity to benefit the economy by having more capital to draw upon rather than Generation Z. The limited economic potential of Boomers.
Recently, Hunt criticized the land tax, describing it as a tax on “ambition” and “deeply distorting”. When asked about the possibility of new taxes on expensive properties, he replied: “If you are talking about stamp duty, I think if anything we should go in the opposite direction.”
I can’t believe I sound like I agree with Mr Hunt, but stamp duty definitely needs radical reform. I can see no fair justification for imposing a tax on the purchase of a property. It is a transaction between private individuals, and I struggle to see why the state should get a reduction especially when it could have received a capital gains tax. The seller was also responsible for council tax and any business rates if required, which would be borne by the buyer thus ensuring that public service costs would continue to be covered. Stamp tax should have ended when our war with France ended!
The Conservatives’ statement says first-time buyers purchasing homes worth up to £425,000 will be exempt from stamp duty. There is also a proposed two-year Capital Gains Tax (CGT) exemption for buy-to-let landlords selling to existing tenants from April 2025.
This is in line with expectations that high interest rates will continue for another two years and gives landlords an easy break if they sell to existing tenants. Whether current tenants have a sufficient deposit and the ability to obtain a mortgage is another matter. After all, if a tenant can afford a deposit and get a mortgage, they likely already own the property. I don’t think this policy has been thought through.
It would be better to eliminate the capital gains tax if ownership were to pass to a family member, thus facilitating financial security for the next generation sooner, and thus improving the odds of taking risks in entrepreneurship.
Meanwhile, Labour’s every tax policy is appalling. I often wonder what level of due diligence is done on these policies to plan scenarios for potential social consequences.
Labour’s plans to introduce VAT on private school fees are a disaster. The fact that we have a private school system reduces the burden on already overcrowded public schools. We need to make private education more affordable, not less expensive. We need an education policy that works for our future economy. The ideal scenario would be to fund public schools sufficiently to cover the costs of the best educational environment. Right now, the cheapest way to do this is to maximize the potential of our bright minds, and we should look to helping more parents finance private education or even private tuition. We will offset this investment in future tax revenues.
Equally outrageous are Labour’s plans to abolish non-resident tax status and close it down.
We need to be careful in eliminating the tax status of foreigners. It is unfair to impose a tax on global wealth that the UK has not contributed to generating. This would reduce foreign direct investment in the UK not only in terms of financial capital but also human capital – the good immigrants we need.
Likewise with CGT, CT and IHT, there is nothing I find encouraging to improve our lives.
Read more:
Tax policies: the good, the bad, and the ugly