Treasury written question – answered on 15th October 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 if he will estimate the effect on revenue to the Exchequer of index linking capital gains and taxing them as income.

Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

A broad estimate of the eventual steady state impact of index linking capital gains and taxing them as income, 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 Act 2008. However, a reform of this kind would result in a large behavioural response and as such estimates are susceptible to a wide margin of error.

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