US President Joe Biden spooked some economists in the UK last month after he announced plans to nearly double capital gains tax for the wealthy in his country. Campaign groups and economists warned Chancellor of the Exchequer Rishi Sunak not to follow suit. The standard capital gains tax rate in Britain is 10 percent for basic-rate taxpayers and 20 percent for top rate payers for financial assets, and up to 28pc for property.
The Office of Tax Simplification published a report in November, commissioned by the Chancellor, that suggested wealth taxes including capital gains could be used to recoup funds.
George Bull, of accountancy firm RSM, warned that Mr Sunak may consider a similar move to the US President in the next Budget.
He told the Telegraph: “If capital gains tax rates were aligned with income tax rates, the top rate of capital gains tax would increase to 45 percent in Britain.
“The Government may reveal its intentions on this at the next Budget.”
Mr Bull added that such a policy had potential to raise £14billion a year, but could also raise much less than this as people would look for ways to reduce their tax burden.
Philip Booth at the Institute of Economic Affairs argued that capital gains tax is a “double tax”.
He said: “Unless you are selling a second home or a painting, capital gains tax is very often a double tax.
“Why does the price of shares increase? Because investors anticipate higher future profits, or because profits are reinvested within the business rather than being paid as dividends.
“Those profits get taxed, you accumulate them within the business, and then as a result of accumulating them the share price goes up, and when you sell the share it gets taxed again.”
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Chief Economist at Resolution Foundation, Jack Leslie, told Express.co.uk in March that the Government should reform wealth taxes in order to raise funds.
He said: “The Government should fix the system that it has, make it fairer, and close the loopholes.
“You could raise billions without touching the headline rates, fixing the current system is a better approach than trying to introduce a whole new wealth tax.
“One of the really big trends in the economy over the last 30 years is that the overall value of the wealth people hold is worth around twice what it was 30 years ago.
“But at the same time, taxes on wealth has stayed completely flat, so we are essentially taxing wealth half as much as we used to.
“That doesn’t seem to make much sense given we might need to find more money after this crisis, and wealthy people can probably afford to pay more.
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“It makes sense that the people who are less likely to have lost their jobs and faced health risks, it does make sense that wealthy people can should pay more in the future.”
Mr Sunak hinted last week that the wealthy in the UK may be spared from tax hikes if the UK economy continues in its promising trajectory.
He said: “As we look forward to reopening over the coming weeks and months, there are signs to be cautiously optimistic and we can see that in the data. I’m hopeful that will be sustained through the rest of the year.
“We are seeing consumer confidence back to pre-pandemic levels. Chief finance officers are very positive. We know that there is an enormous amount of excess savings both in the household sector, approaching £140billion, and £100billion sitting on corporate balance sheets.
“The top one percent, for example, of income earners pay or account for almost 30 per cent of all income tax receipts as it is, so I think we start with a very progressive tax system.
“We can get debt on a stable to declining basis broadly with the measures that we’ve already announced.”