Q: When is it prudent not to work hard and save for the future
Nice one Dave and Nick. Note sure why this politics of envy has been allowed to pervade into the mainstream, I assume because it is has no impact on the policy makers themselves who will no doubt be exempt when it comes to selling their own second homes and they will be classed as “essential assets for doing business”.
Now I’m no fan of second homes per se – I live and work in the Lake District and hate to see nice looking properties sitting empty for all bar 2 or 3 weekends a year. I fully “get” the need for affordable housing for local people (although there also needs to be jobs for them as well which I shall talk about in the future!).
What does bother me is the usual “one size fits all” blanket nature of the proposals which seem to be designed to punish one and all, for neglible overall financial benefit (in the region of £1 billion – ie a lot less than is given to India in overseas development aid every year, obviously because as the home of some of the wealthiest billionaires on the planet it is in need).
This is just plain wrong…
Let me give a couple of examples which seem to me to demonstrate why a flat rate capital gains tax at 40% (or whatever rate) is just plain wrong – and punishes the innocent. Someone has worked in the private sector all their lives and has bought a second home as a pension pot (don’t forget Mr Cameron that not everyone gets gold plated final salary pensions anymore). They have brought this home with taxed earnings, no doubt rented it out for years, paid tax on the rental income as well as providing much needed rental accommodation given the lack of state housing. When they decide to retire why on earth should 40% or even 50% of any capital gains made on the value of the property go to pay for a bloated public sector deficit? Likewise people who have diligently invested in the stock market and lucky enough to have made a healthy return (a rare breed these days). Why should they also be punished?
A Fair Solution
From my humble perspective (and for once I’m with Vulcan Redwood on this one) a fairer system would be a return to the tapered system that was in place until Labour found it all too complicated. So by all means punish short term speculators and levy gains made within 1 year or even 2 at 40% or 50%. But for those people making long term commitments and investments surely the sensible thing is to reduce the tax levels accordingly, with a zero rate after 5 and certainly 10 years.
Just a thought….