We've criticised the Government for raising capital gains tax on small business by 80 per cent, and supported the many justified complaints from business groups and others.
But in the interests of debate, here is an alternative view from a respected commentator - Martin Wolf in the Financial Times:
"The system of taper reliefs introduced by Mr Brown made no sense. They were an example of his belief that the man in the Treasury knows best. The underlying idea was that short-term speculation is bad. But the market liquidity, on which London's position as a financial centre rests, depends on speculation. Furthermore, there is no reason longer-term holdings of financial claims would promote investment in longer-term assets, as Mr Brown believed. These tapers merely represented arbitrary interference in decisions on how long to hold assets.
"It is also impossible to justify the distinction between business and non-business assets. As an employee of Pearson, my holdings via "save-as- you-earn" and executive incentive schemes are counted as business assets, while my holdings in other companies are not. This distinction presumably rests on the assumption that employees will work harder if they hold shares in their employing company. There is no reason to believe this, except perhaps for a handful at the top. Far more compelling is the opposite argument: people should diversify their risks away from shares in their employers.
"It is true a capital gains tax on shares involves an element of double taxation, to the extent that companies also pay capital gains tax via corporation tax. In fact, corporation tax ought to be abolished, as Willem Buiter of the London School of Economics pointed out in a letter to the FT yesterday. But the existence of this bad tax cannot be used to justify a higher capital gains tax on personal holdings than business ones.
"If anything, Mr Darling could have gone further towards a comprehensive income tax, while lowering marginal rates. Is this unthinkable? Far from it. Nigel Lawson, arguably the most reforming chancellor of the past half-century, brought capital gains tax into line with income tax in his famous 1988 tax-lowering Budget. Let none of today's Conservatives pretend that Mr Darling has introduced some interventionist Labour wheeze. On the contrary, he has taken a step away from one, towards the rather more sensible position left by Mr Lawson."
Is Martin Wolf right? Should corporation tax be completely abolished and capital gains taxed in the same way as income? Would this be a good thing if the overall burden of tax was lower as a result? Please let us know what you think.