"Andy Hall" wrote | "Owain" wrote: | >What about removing residency and spousal inheritance exemptions from | >CGT and replacing Stamp duty and allowing a tax-free gain in value | >per annum equal to the bank base rate, compounded annually. Any gain | >in value above tax-free gain taxed at 80%. | Hmm.. Inheritance tax is iniquitous enough as it is without removing | exemptions.
I think much of the iniquity of inheritance tax is because of the exemptions. Actually, my "bright idea" (ill-considered off-the-cuff disjointed thinking :-) could replace much of IHT because for many the rampantly-inflated house value is the major asset bequeathed.
| The notion of 80% tax on anything is not likely to be | popularly received.
Perhaps it could be justified in some way on environmental (like fuel) or health (like tobacco and alcohol) grounds. The tax raised could be earmarked for providing affordable rented and community self-build projects in those same areas where property prices have risen the most.
As for tapering it in, retrospective application of legislation is usually a poor proposal, so a 'back date' could be set ie only growth in value after that date was taxable, chosen to be approximately equivalent to the current tax burden but rising year on year (and without the government having to increase any rate or threshold).
Anyway, it's a marginal rate, in the example I gave it equals a tax of 32% on the overall growth or 16% on the curent market value, which compares fairly with general income tax rates or even 17.5% VAT. It would apply mostly to those who have a grossly-inflated house value through artificial market conditions, although some fixer-uppers could also get hit. I'd help them by allowing full VAT relief on restoration to habitatable condition of derelict property without having to do the existing demolish/rebuild cycle.
Owain