Clause 45 - Taper relief: holding period for business assets
Finance Bill
12:15 pm
Mr Michael Jack (Fylde, Conservative)
I rise to underscore the remarks made by my hon. Friends. The Economic Secretary will have had the very helpful briefing, which deals with some of those matters, from the Chartered Institute of Taxation drawn to her attention. It is probably as well to point out that all such matters are drawn to the attention of Treasury Ministers, who have copious briefings on how to deal with them. I look forward with great interest to what she has to say on those points.
I should like to take our discussion of clause 45 a little further. Although I welcome the fact that the tapered arrangements for the lowest rate of capital gains tax now apply after two years rather than after four, as they did previously—it is a pleasure to see when a sinner repenteth—I should like the Economy Secretary to spend a few moments explaining the rationale for that move.
When tapered tax was introduced, the Government told us that it was good and virtuous. They told us that it would aid investment in British industry. They told us that short-termism was a bad thing, and therefore a taper over a much longer period was entirely to be applauded irrespective of the questions about complexity that Conservative Members raised. On page 49 of the Red Book, clause 45 is justified by reference to
''simplification of the CGT regime to reduce compliance costs, in particular for those who invest in business and for employees.''
What a turnaround by the Government. They introduced the complexity that capital gains tax represents and we now have to unpick it. I should be interested to know the reasoning behind that gradual move.
Will the Economic Secretary tell us why tapered tax has to be applied at two years, rather than at three years, one year or zero years? She is shrugging her shoulders and smiling in her delightful way, but there must be a reason why the Government took that decision, about which it would be helpful for both Parliament and the world of business to know more. She is well versed in economic analysis and is a highly intelligent person who should have no difficulty in providing information on economic gains under the previous regime of longer tapered arrangements. Can she say how much more investment took place as a result of the arrangements that the clause will reverse? How did British productivity gain from such complexity, and what will be the gains from the change to a two-year regime? Can she expand on the Government's policy, philosophy and approach to capital gains tax?
The clause makes a clear distinction between business and non-business assets. Discussions on previous clauses have illustrated that an economic effect can be achieved in the economy through investment in non-business assets. It is about time that the Government outlined their philosophy on capital gains tax, because in successive Finance Bills we have seen a piecemeal unpicking of tapered tax arrangements. The Economic Secretary and the
Government owe it to the House and the country to lift the lid a little on their approach to that tax.