If taxes must rise, Sunak should pick on private equity instead

It’s not axiomatic that taxes must rise to pay for the pandemic, if you seriously believe the surge in growth, jobs and prosperity that will follow the rollout of a hyper-efficient national vaccination programme will generate sufficient revenues for Rishi Sunak to stabilise the public finances, albeit at the highest level of debt ever seen in modern times. On the other hand, the Chancellor is surely pondering this question: in the current mood of public gratitude for the NHS and government support for the economy, there must be taxes I can tweak that won’t lose sackloads of Tory votes and might chip the peak off the debt mountain — so where are they?

We can probably dismiss, for example, the shift to ‘pay per mile’ road pricing for motorists reportedly being mooted by the Treasury to replace the £40 billion a year it might lose if sales of new petrol and diesel cars are banned by 2030. Long kicked around as a concept, road pricing is fraught with difficulties as to whether it can differentiate between journeys that are vital, economically useful or purely for fun, and motorists who could easily switch to public transport from those who haven’t seen a bus in their district since 1985. Only in cities such as Singapore and Stockholm, where citizens do what they’re told, has it been tested even in simple form. And no one thinks it would generate a net increase in tax revenues, rather than at best partially filling a new hole. So let’s park that one, Chancellor.

But how about a ‘realignment’ of capital gains tax to match income tax rates? Now — in a Scrooge-like way — you could be talking turkey. CGT is currently set at a maximum of 20 per cent on most assets and 28 per cent on properties other than main homes, whereas top-rate income tax is 45 per cent.