Former Conservative cabinet minister Liam Fox has called on the Government to scrap capital gains tax for five years to boost economic growth ahead of this month’s Budget.
Speaking to the Institute of Economic Affairs today, Fox backed radical tax changes to help savers and first-time buyers while cutting back on welfare.
He said: “I would like to see capital gains reduced, if possible to zero, for a defined period – three to five years – before being reintroduced at a more sensible level.
“This would create a tax window where businesses that are sitting on assets might be encouraged to sell, investment in capital becomes more attractive and where hundreds of thousands of second homes might come on to the market.”
Fox believes the drop in CGT would lead to 750,000 second homes coming onto the market, boosting construction and stamp duty receipts. He stops short of arguing for the permanent abolition of CGT and favours a taper relief with low taxer for longer holds, far below the current level of 28 per cent.
In a wide-ranging speech, Fox called for tax on cash balances in bank accounts to be scrapped, costing £2.7bn, to help savers facing record low interest rates.
He said: “Such a move would directly benefit pensioners with savings, therefore paving the way for the means testing of the winter fuel allowance and other benefits enjoyed by pensioners who have personal wealth that should leave them well clear of the safety net of the welfare state.”
He also called for an end to stamp duty for young people buying homes under £250,000 and an end to housing benefit for people under 25.
Fox also called for a five-year freeze on public spending to save £345bn and blasted the “immoral” concept of high taxes.