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Budget Hype

Now that we actually know when the budget is going to be (24 March) and therefore also, by extension, the date of the election - the frenzy starts!

The Financial Times on Monday 15 March 2010 has reported heavy selling of assets by taxpayers ahead of next week's Budget. Why? Asset holders are apparently frightened that the Chancellor will announce an increase in Capital Gains Tax (CGT) from its current rate of 18%.
 
As commented in earlier blogs, the government needs all the cash it can get its hands on at the moment. However, even in these times, I think the government would find it difficult to sell the abandonment of its "lower" and "simpler" CGT regime within 2 years of introduction. Moreover, don't forget that the current CGT regime replaced one that was heralded (on its introduction in 1997) as encouraging long term holding of assets. Remember "the end of boom and bust"?!
 
The Financial Times describes the belief that the Chancellor will raise CGT to 18% as "misguided". According to the FT, the government does not consider now to be a politically or economically expedient time to raise CGT, although it quotes an "insider" as saying that the government is "continuing to look at this issue".