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Osborne faces calls to cut CGT to boost savings and investment

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Osborne faces calls to cut CGT to boost savings and investment

Chancellor George Osborne has been urged to reduce the main rate of Capital Gains Tax (CGT) to 25% by a think tank.

The Centre for Policy Studies has called on Osborne (pictured) to reduce CGT from its current main rate of 28% to 25% in his Autumn Statement.

It argued the tax was economically bad, discouraging entrepreneurship, savings and investment, reducing economic growth.

It added that CGT distorted capital markets by encouraging individuals to hold on to assets that would be better off under different ownership, and channelled funds into tax exempt assets rather than those with the highest return.

A report by the Centre of Policy Studies said: 'There is no excuse for the Treasury not to cut CGT immediately to about 25% (which is where the Treasury model would suggest it should now be to maximise revenue). Even further, we consider the Treasury’s assumptions too pessimistic. Returning to the flat rate 18% rate would cost between £300 million and £900 million under their pessimistic assumptions, but bring with it a positive impact on economic growth.'

The think tank also called for the government to set out a time table for the abolition of National Insurance Contributions.

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