Deputy PM Nick Clegg has said a taper rule for capital gains tax (CGT) is one of the plans currently being "considered" by the coalition Government.
He made the statement on BBC Radio Four this morning, after days of turmoil on an issue which has split voters and politicians alike.
Plans to raise CGT to the level of income tax, which could double the levy for some high earners, was a cornerstone of the Lib Dem manifesto in order to pay for a raise in the income tax threshold to £10,100.
But this morning, Clegg said the coalition is thinking about putting in place a taper rule for any hike.
"It is impossible to start picking off whether you believe in tapering, in whether you believe in indexation - so you don't tax the increase of the value of assets through inflation and you have to couple that with the consideration of what rates you use," he says.
"All of those things will be considered."
Last week, senior Tory MP John Redwood wrote to the Treasury secretary criticising "unfair" plans to raise CGT to the level of income tax,
He proposed a form of taper relief, where the longer an asset has been held, the lower the tax paid.
However in a TV interview business secretary Vince Cable rejected Redwood's idea for reintroducing a taper rule, saying: "I don't accept the way he puts it. It's not as clear-cut as the vocabulary suggests."
The row over CGT is expected to spill into David Cameron's first turn at the dispatch box today at 3pm, as he faces his inaugural Prime Minister's question time in the House of Commons.
However the Government is not expected to disclose full details of its plans until the emergency Budget on 22 June.
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