London: UK Prime Minister David Cameron promised to listen to lawmakers in his Conservative Party who are unhappy about the coalition government's plan to increase taxes on capital gains.
"We will listen to all the arguments, but the process is clear: there is a budget coming and that's when decisions will be made,' Cameron told BBC Radio 4's Today programme yesterday. "There are dangers if people treat capital gains as income. You end up with tax evasion."
His comments come a day after Conservative lawmaker John Redwood urged the government to temper the planned capital gains tax increase, saying it would destroy incentives to save and encourage tax evasion. Former Conservative home affairs spokesman David Davis yesterday added his voice to calls for the proposal to be changed.
"When you put up the rate, very often the revenue goes down," Davis told Radio 4. "The reason for that is because the rich rarely pay. The people who can't avoid it are the people who've put money into a second home, put money into shares, whatever, elderly people, basically, who are going to retire shortly."
Disgruntled members of Parliament have begun expressing doubts about some of the policies agreed between Cameron and Nick Clegg's Liberal Democrats following the inconclusive May 6 election result.
Backbenchers last week complained about Cameron's plans to increase thresholds in no-confidence votes in the House of Commons and about his efforts to water down the power of the 1922 Committee. Cameron and Clegg are trying to prevent high earners from turning income into a capital gain to avoid paying income tax of up to 50 per cent. Capital gains are taxed at a flat rate of 18 per cent.
The Conservative-Liberal Democrat coalition's legislative programme published this week says capital gains on non-business assets such as shares and second homes will be taxed at rates "closer to those applied to income."
