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Capital Gains Tax (Rates)

Part of the debate – in the House of Commons at 1:14 pm on 23rd June 2010.

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Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills 1:14 pm, 23rd June 2010

I think that the gentlemen to whom the hon. Gentleman refers are mostly talking about competitive deflation in the world economy, which is, of course, absolutely disastrous. The Chancellor referred in his speech yesterday to the fact that other countries that are in surplus have to do the opposite of what we are doing in terms of fiscal consolidation. The Chancellor made that very clear in relation to action to be taken by the Chinese and action that should be taken by countries such as Germany. Of course we understand the wider context.

Let me return to the criticisms about value added tax. The shadow Chancellor put the question in a personal way when he asked why I was supporting the increase in value added tax. The three of us-the shadow Chancellor, the Chancellor and myself-went around the television studios during the election campaign; we were the three Chancellors, a bit like "The Three Tenors". We had our several encounters and each of us was asked time and again, "What do you think about value added tax?" As I recall, all three of us gave an identical answer: "We have no plans to increase value added tax, but we have not ruled it out." The reason why we are now having to confront the matter is that there is a bigger structural deficit than was appreciated and action had to be taken. That could have been a tax measure, or it could have been a spending cut. Is that what Labour Members are saying? Do they want more cuts in spending? Do they want another tax? What do they want?

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