IEA warns Capital Gains Tax hikes could cost £6.2 billion and curb investment
What happened
The Institute of Economic Affairs warned that increasing Capital Gains Tax (CGT) could negatively impact public finances and stifle necessary investment. The IEA's analysis found that raising the two current CGT levels from 18% and 24% to 20% and 34% would cost the Exchequer approximately £6.2 billion over the remainder of Parliament.
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Why it matters
The warning concerns potential changes to Capital Gains Tax, which could alter taxpayer behavior by encouraging investors to hold assets longer. This change in behavior could ultimately deter entrepreneurs and affect the level of investment and government revenue.
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Who's involved
- Institute of Economic AffairsIssued the analysis warning that tax hikes could negatively affect investment and public finances.
- parliamentThe legislative body responsible for debating and approving the proposed tax hikes.
- House of CommonsThe lower house of Parliament involved in the Budget process where the tax hikes would be considered.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- parliamentSpeculative
The Parliament might face pressure regarding tax hikes that could deter entrepreneurs and reduce investment.
- House of CommonsSpeculative
The House of Commons might see changes in investment levels or entrepreneurial activity if CGT rates are raised.
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The entities involved
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Institute of Economic Affairs
free market think tank founded in 1955 in the U.K.
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