Julian Knight: A rise in capital gains tax? It's only fair

Tory MPs are wrong to oppose reform of CGT – an increase won't penalise ordinary folk, but it will close a fat-cat tax loophole

Pick your fights very carefully: it's good advice in life, as well as in politics.

But it's advice that Tory MPs John Redwood and David Davis seem to be ignoring in their opposition to the proposed capital gains tax (CGT) rise. They think that by coming out so openly against CGT rises they are drawing an early line in the sand for the Government on behalf of the right of the party. Instead, what they are doing is taking on a Prime Minister at his strongest, firing their broadside when there will be much bigger battles ahead as the inevitable tax rises happen next year.

By saying CGT is a tax on ordinary people – including, laughably, the working class – they are being either delusional or untruthful. Since the CGT rate was lowered by Labour, it has been used as a tax dodge by many in the City who, by morphing income into capital gain, have cut their tax exposure from around half of the sum earned to just 18 per cent. As for savers, they have individual savings accounts to shelter growth free of tax. And second-home buyers – who, don't forget, have drained a lot of housing stock, particularly in rural areas – well, they have a generous CGT allowance. Also, this tax is on a gain, not on the value of the property being sold.

I'm no fan of higher taxes, but CGT reform is different. It's about fairness, and, if they pitch the tax level right, it won't scare real investors. Here's an idea, why not align capital gains with an individual's income tax rate?

What a good pension plan

State pension to rise in line with life expectancy is one proposal by Iain Duncan Smith, Secretary of State for Work and Pensions, last week – and it's a good one.

It would be transparent and could be independently monitored. But the state pension isn't the big problem anymore; the argument over whether we must work longer has been had and won. The big problem is how to get people to save more so they don't have to rely on what the state pension offers.

Greater flexibility proposed by IDS will make pensions more attractive, but won't be enough; we need a root-and-branch review. As for his benefit reforms, the idea of topping-up the pay of people leaving benefits for a job, so that work actually pays, as previewed in this column two weeks ago, is the best idea in this field for a generation. It will cost just shy of £4bn a year; a lot of cash in a fiscal crisis. It's going to be very difficult for IDS to get the money out of the Treasury – although David Laws is, I believe, quite sympathetic towards the scheme – but it has to be found, not just for the hundreds of thousands it will help, but also from a party-politics view. It was the Tories who "parked", in IDS's phrase, millions on benefits in the 1980s and early 1990s. A too-dogmatic industrial policy – or de-industrial policy – and a couldn't-give-a-damn attitude scarred this nation. You see, the Tories stopped the heartbeat of the working class in the north and inner cities as part of otherwise necessary reforms; it is now down to them and the LibDems to resuscitate it.

Better news on store cards

It's rare that I get to spread good news, but here's some – store-card spending has fallen 33 per cent year on year.

These pernicious products, plugged by pushy salespeople, are a rank deal. Despite Bank of England rates at 0.5 per cent, they commonly charge close to 30 per cent interest. The Finance and Leasing Association, the trade body of the store-card industry, is less than pleased with the news of failing sales. It called last week for the Government urgently to review the legislation which sees interest rates capped and a cooling-off time of seven days on new agreements. In my view, an industry that doesn't accept the right of a consumer to have second thoughts is trying to pull a fast one.

But, you never know, with the new austerity, we could see the withering away of the whole store-card industry. Good. These cards have been ripping off the public for far too long.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
News
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
News
i100
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Life and Style
A small bag of the drug Ecstasy
Health
Life and Style
Floral-print swim shorts, £26, by Topman, topman.com; sunglasses, £215, by Paul Smith, mpaulsmith.co.uk
FashionBag yourself the perfect pair
News
news
News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
News
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Extras
indybest
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Financial Analyst - Forecasting - Yorkshire

    £300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

    Business Architect - Bristol - £500 per day

    £500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

    Regulatory Reporting-MI-Bank-Cardiff-£300/day

    £200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Day In a Page

    Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

    Hunters protect Russia's rare Amur tiger

    In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
    Transfers: How has your club fared in summer sales?

    How has your club fared in summer sales?

    Who have bagged the bargain buys and who have landed the giant turkeys
    Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

    'I'm a realist; I know how hard this business is'

    Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
    The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

    The best swim shorts for men

    Bag yourself the perfect pair and make a splash this summer
    Has Ukip’s Glastonbury branch really been possessed by the devil?

    Has Ukip’s Glastonbury branch really been possessed by the devil?

    Meet the couple blamed for bringing Lucifer into local politics
    Dress the Gaza situation up all you like, but the truth hurts

    Robert Fisk on Gaza conflict

    Dress the situation up all you like, but the truth hurts
    Save the tiger: Tiger, tiger burning less brightly as numbers plummet

    Tiger, tiger burning less brightly

    When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
    5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

    In grandfather's footsteps

    5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
    Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

    Martha Stewart has flying robot

    The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
    Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

    Do women cyclists need 'pootling lanes'?

    Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
    A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

    A tale of two presidents

    George W Bush downs his paintbrush to pen father’s life story
    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

    The dining car makes a comeback

    Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
    Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

    Gallery rage

    How are institutions tackling the discomfort of overcrowding this summer?
    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

    Eye on the prize

    Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
    Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

    Women's rugby

    Tamara Taylor adds fuel to the ire in quest to land World Cup