Friday, 28 May 2010

Cable says there is "no split" over Capital Gains Tax

There has been some dispute between Lib Dems and Conservatives at the level at which Capital Gains Tax should be set. The Liberal Democrats have been looking for an increase, potentially in line with the higher rates of income tax. Some Conservatives on the other hand are appalled by the idea of taxing wealth in the same way as income, with David Davis telling Daily Mail readers that an increase would be akin to "punishing the virtuous...penalis[ing] hard work and saving." Yes, that old chestnut.

Business secretary Vince Cable has been at pains to stress that the coalition government has not been split over this issue. Dr Cable said that "[this is] not actually an argument between the coalition partners, as I understand it, it's an argument between a few Conservative backbenchers and others".

But the "few" Conservative backbenchers include the likes of John Redwood, who called for an "intelligent conversation" on Capital Gains Tax, while going on to express rather unintelligently his belief that increases would "clobber" those on "average incomes". Work and Pensions Secratary Iain Duncan Smith has been forced to reassure disquietened Tories that "George Osborne is not the sort of person that's going to do any damage to the British economy".

All this is very interesting, and shows that Tory backbenchers' historic unruliness is still a force to be reckoned with. Not for them the politics of compromise. Threatened rebellions seem the tactic of choice, rather than responsible discussion. All the same, the fact that government policy - streaked as it is with Liberal Demcorat values - is proving unpalatable to right-wing Tories demonstrates the success of the Liberal Democrats in helping to formulate socially responsbile ideas with which the coalition government can move forward.

David Cameron has advised his critics to hold fire until the budget on 22nd June, insisting that they were being "listened to". While the media focus on the non-existent split at the top of the coalition, Cameron's dilemma is how to bridge the rapidly widening divide between the executive and a legislature that clearly doesn't grasp the concept of collective responsibility.

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