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Capital Gains Tax

Treasury written question – answered on 21st May 2008.

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Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

To ask the Chancellor of the Exchequer pursuant to the answer of 26 November 2007, Official Report, column 47W, on capital gains tax, if he will estimate the revenue implications of taxing capital gains at the same marginal rates as income tax with indexation from April 2008.

Photo of Jane Kennedy Jane Kennedy Financial Secretary, HM Treasury

A reform of this kind would result in a large behavioural response and as such estimates are susceptible to a wide margin of error.

A broad estimate of the eventual steady state impact, taking account of the likely taxpayer response to such a change, is additional receipts in the order of £2 billion a year by comparison with the capital gains tax regime contained in the Finance Bill 2008.

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