Why increasing Capital Gains Tax could actually reduce revenues


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Tax and Fiscal Policy
It appears that the new coalition government remains committed to increasing the rate of Capital Gains Tax (CGT) to a level in line with income tax. There are many reasons why this is a bad idea. For example, CGT represents double taxation  and also creates disincentives to save . In addition, since the tax is only levied when assets are sold, it creates a “lock-in” effect, as people stop selling their assets to postpone the tax.



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