Rees-mogg leads backlash against plan to raise capital gains tax

JACOB REES-MOGG has hit out at plans to increase capital gains tax (CGT) amid a mounting backlash against proposals to target investors and landlords.

In one of his first interventions since resigning from the Cabinet last month, the former business secretary yesterday suggested that a planned rise in the headline rate of the tax would put the property market at risk and damage economic growth.

His concerns were echoed by a chorus of business leaders and Tory donors including the Marks & Spencer chairman Archie Norman and Peter Hargreaves, founder of the FTSE 100 broker Hargreaves Lansdown.

Mr Rees-mogg said: “CGT is an inefficient tax where people simply delay transactions when it is too high.

“Increasing it is, therefore, economically inefficient and leads to the poor allocation of capital. This weakens economic growth.

“There would be a risk to the property market, already affected by rising interest rates, of any change to CGT as landlords may seek to leave the market.”

Another former Cabinet minister said many MPS were furious about the plans and added: “A large number of Conservatives are likely to be seething with anger but will accept that the leadership can govern in coalition with Labour if they have to.”

The Daily Telegraph revealed yesterday that Jeremy Hunt is preparing a raid on entrepreneurs, savers and landlords to help plug the £50bn hole in Britain’s public finances. CGT is taxed on assets including shares and buy-to-let property when they are sold. The Chancellor is examining changes to the headline rate, reliefs and allowances on CGT.

Tory donors accused the Government of being un-conservative over the plans. Lord Cruddas, the founder of trading business CMC Markets, said: “I fear the Conservative Party is no longer Conservative but an amalgamation of Lib Dem and Labour and Remainers.”