A Conservative peer has urged the coalition to cut the Capital Gains Taxes (CGT), arguing it discourages savings and investment and drives funds away from assets with high returns.
In a paper issued by the Centre for Policy Studies, Lord Flight said there was "no excuse" not to cut CGT immediately to about 25%, saying a deeper cut to 15% would "clearly make economic sense".
Co-written by Oliver Latham, an Oxford political economics PhD student, the paper set out how even the Treasury's own analysis shows that, once the 45p top rate of income tax comes into effect next year, the 28% rate will raise less revenue than a lower rate.
Lord Flight said: "This is a ridiculous situation, and one which should be addressed immediately. There is simply no excuse for the Chancellor not to cut CGT in the Autumn Statement.
"This paper provides overwhelming evidence from both the UK and overseas that higher rates of CGT are damaging to growth because of the damage it does to resource allocation and competitiveness; to entrepreneurship and to business efficiency."
Among the other points made in the paper is that the current rate drives funds into tax-exempt assets, rather that those which deliver high returns.
It also explained how it discourages entrepreneurship by incentivising business owners to continue managing their enterprises once they become established, rather than selling them and moving on to another project.
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