The Horsell's Mouth Politics, pedantry and personal interests

The Daily Mail is leading the charge for the right wing of the Conservative Party and David Davis suggesting that people with second homes, shares, jewellery and other assets should not face any increase in Capital Gains Tax from 18% to 40% in order to help people on lower incomes (below £10,000) stay out of income tax altogether. There is plenty of talk of “betrayal” and “revolt” among the 1922 hopefuls and a general feeling that a Conservative government doesn’t do this sort of thing.

Firstly, let’s remember that the reason we are in government at all is because we’ve been able to come to an agreement with the Lib Dems. Sure, a Conservative government with a outright majority would probably have steered clear of CGT altogether but we were 18 seats short of where we wanted to be and the result is compromise rather than full implementation of Conservative principles. It’s a little uncomfortable in places but the PM has said that stable government was necessary in this time of national strife and compromise is part of that.

Furthermore, David Davis says that he wants to protect the ”hard-working, responsible, self-reliant middle and working classes”. I’m not sure how many “ordinary” people he feels deal in more than £10,000 of capital gains each year but I suspect the answer is “not many”. You also won’t find in any of the major papers the fact that the current 18% rate was only set by Labour in 1998 and previously had been much higher under the Conservative government during the 80s and 90s.

The fact is that people who have these kinds of assets to make money on need to pay their fair share in helping reduce the deficit – that may be fair to those whose trading helped bring the problems about and unfair on prudent savers. That’s unfortunate, it’s not entirely comfortable and it’s certainly not Conservative; but it’s necessary and hopefully temporary.

What is important is that those who are being helped by this measure by being freed of tax burdens and encouraged to work at the lower end of the pay scale are given a very firm steer in that direction. There is no justice in asking some people to pay for a £10,000 income tax threshold if those benefitting from it are then not working or contributing to society. Just as we need the wealthiest to help the country out of trouble, so we need the bottom-up economy to get working too.

Having taken a centrist view of the CGT issue then, I’m happy to take a more centre-right view on Iain Duncan Smith’s promise to mend our benefits system, which is a national joke. Of course I believe that the poorest in society should have the help they need. But I also firmly believe that thousands and thousands of people routinely abuse our over-complex and under-thought benefits system for their own gain – at the expense of the entire nation and other taxpayers.

So I hope that left-leaning thinkers will see a connection here – between controlling the right-leaning tax tendencies of the Conservative Party but also changing the liberal attitudes to the Welfare State that have cost Britain money and not a little self-respect during the past 20 years.