I must salute the media for providing plentiful source material for this blog. This morning their business correspondent was speculating, apparently on a well-informed basis, that a £100,000 capital gains tax exemption is to be introduced for those retiring from business, apparently as a sop to the loud and widespread complaints resulting from the proposed abolition of taper relief. Now where have we seen that before.......?
The other interesting aspect of the above item was that Gordon Brown was attributed with the desire to respond to public criticism of the CGT changes, rather than Alistair Darling. Which is where the title quote comes in!
Many many years ago I studied King Lear for A level English Literature, and "the wheel is come full circle" is one of the passages that I recall clearly. Now King Lear was an elderly king who found it difficult to let go; he abdicated, but really still wanted to enjoy power, or at least its trappings. The quote is apposite for two reasons; firstly because the proposal carries strong echoes of the CGT system that Gordon Brown replaced with taper relief almost a decade ago, and secondly because there is a strong suggestion here that he continues to pull the strings at the Treasury, as I have previously suggested he might.
Now many would suggest that the second point is not necessarily a bad thing, given Gordon Brown's successful stint as Chancellor, although presumably Alistair Darling would not be among their ranks! But there is something pretty bizarre about effectively re-instating the CGT business regime that Gordon Brown scrapped in 1998, particularly as the taper relief regime was generally regarded as 'a good thing' by taxpayers. The inescapabable phrase is 'if it isn't broken, don't fix it'.
The problem that underlies all this is, to my mind, lack of ingenuity in the civil service in terms of drafting tax, and specifically anti-avoidance, legislation. The change is a knee-jerk response (and how many of those are we seeing at the moment from this government?) to publicity about the advantage taken of the current CGT regime by venture capitalists and private equity investors. Whilst the obvious thing to do would be to produce targetted legislation to block that perceived abuse, the typical government reponse, clearly illustrated here, is to change the whole system and hurt the 'innocent' along with the 'guilty'. This is effectively an admission that the tax profession is niftier on its feet than the parliamentary draftsman, which is a fairly sad state of affairs. So the actions of a few taxpayers result in the denial of a system that worked to the many, which cannot be right.
All of this suggests that the government has no coherent tax strategy, and is blundering around stealing ideas from the opposition (some of them very bad ones - look no further than domicile) and making knee-jerk reactions to whatever tax story features in the quality Sunday papers this week. That is no way to run a country and its tax system.
PS Apropos of nothing (well, apropos of hurting the innocent along with the guilty, you can be excused for missing a little story from the early stages of the 2010 World Cup qualifying competition this week. Palestine were due to play a second leg qualifier in Singapore, but did not turn up, due to the fact that Israel refused to allow them leave to travel. Now they were not going to win (they lost 4-0 at home in the first leg) but it would have been nice for them to have the chance. Amazingly, FIFA awarded the game to Singapore 3-0 (I suspect due to pressure of time, as the next round takes place in 10 days' time). So presumably we will see Israel ejected from the competition as the true villains of this piece, Mr Blatter? I am not holding my breath.
Comments