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Evaluation of Capital Gains Tax Proposals for 2008/09 - Essay Example
Taxation can be described as the amount of money a firm or an individual pays to the government to ensure the proper functioning of the nation. The tax is levied on the income a person receives, profits an industry makes etc. Taxes are also imposed on services rendered, the the income acquired from the sale of an investment…
There is both furore and appreciation for the reforms from cross sections of the society. This essay tries to explore the pros and cons from various perspectives.
The budget elucidated the projection for 2007/8 at 4.6 billion. On the capital Gains front a new tenet was recommended in the name of 'entrepreneurs' relief.' By this way the entrepreneur is given the leeway of paying the capital gains tax at the rate of 10% on capital gains up to the first 1m, instead of the originally proposed 18%
The projection for 2007/08 is 4.6 billion. The budget introduces a new tenet in the capital gains tax called the 'entrepreneurs' relief.' Wherein the entrepreneurs need to pay just 10% on capital gains up to the first 1m, instead of the originally proposed 18% . This calculus of taxing the entrepreneurs makes the entire exercise a bit complicated.
Let us first understand the capital gains taxation announced in this budget. Different slabs have been fixed for different levels of business per se. There would be a tax rate of 18% on the sale of assets above 1m whereas 10% on sales of assets up to 1m. This implies that about 80,000 people are expected to qualify for the 10% rate. Additionally, the gains made on different occasions would also qualify for the 10% rate up to a "cumulative lifetime total of 1m of gains."
The Chancellor faces flak on the Capital Gains front ...