Deloitte U.K.: Tax Changes to Hit Entrepreneurs

Here’s an interesting clip from CNBC Europe re tax changes proposed to Parliament by Alistair Darling, UK Chancellor of the Exchequer, described as an attempt to close loopholes and recapture political momentum on tax issues from conservative politicians. At first blush, the new rate does not seem too draconian at a unified 18% for realized short and long term gains (the breakpoint is two years under current law). However, the current long term rate is 10%, and there is no indexing for inflation. Thus it increases the tax penalty by 80% on those entrepreneurs and investors who ‘do the right thing’ by taking longer term interests in the business ventures they own.

Bill Dodwell of Deloitte & Touche is the CNBC interview subject, and he describes the potentially negative impact on marginal entrepreneurial investment, and by extension, the British economy:

Britain needs to encourage [entrepreneurs] and a lower rate would send the right signal…It is really bad to hit entrepreneurs, but nonetheless the Treasury has gone with it. I would hope in years to come they would rethink that particular policy…

http://www.cnbc.com/id/15840232?video=557189048&play=1