Shortly after taking office in May, Britain’s new chief secretary to the Treasury discovered a note from his predecessor, Liam Byrne: “I’m afraid to tell you there’s no money left.”
Tomorrow, to help address that mounting fiscal crisis, Chancellor George Osborne will release an emergency budget. It is expected to include an array of spending cuts and tax hikes to reduce the £156 billion deficit he inherited from the previous government. In all likelihood, it will call for a dramatic increase in the capital-gains tax.
Such a move would be disastrous for the economy. Raising the capital-gains tax would discourage Britons from creating new businesses, and scare off investors. The government should instead focus on leaving money in the hands of entrepreneurs. It is their hard work that’s going to create the jobs and wealth needed for full economic recovery.
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For readers seeking further analysis of the Capital Gains Tax proposals, I recommend this post by Steve Baker.