Jim O’Neill: Capital gains tax hike ‘looms’ as top option for Burnham
Lord Jim O’Neill has warned a hike to capital gains tax “looms out” as one of the easiest revenue-raising options for Andy Burnham and his chancellor, John Healey, as the pair draw up plans for their first Budget in October.
“They’ve ruled out the three main taxes, so if they’re going to have to find some money to balance the books, something like capital gains tax looms out as one of the things you’d go go for, not least because traditionally most Labour think tanks think it makes sense to equalise that to income tax,” he said in an interview with LBC’s Andrew Marr.
But O’Neill, who declined a formal role in Burnham’s top team over the summer, warned that the move was “the last thing that should be happening when we want more growth”.
“It will force even more genuine risk takers to be discouraged and think about either moving or not doing as much of this kind of thing as they’ve done,” he said.
Cost of borrowing jumps
Government bond yields rocketed to their highest levels seen in decades yesterday amid investor unease over government borrowing and an uplift in inflation expectations.
The 10-year gilt yield climbed as much as 11 basis points to 5.25 per cent, while 30-year yields hit 5.89 per cent, their highest since May 1998, mirroring similar moves in the US bond market a day earlier.
O’Neill poured cold water over Burnham’s first major speech in the House of Commons yesterday. “The tone of it about implying a lot more government spending to take control of X, Y and Z is the last thing that investors want to hear,” he said.
“The underlying issue is there are many governments all over the world [who] think they can just spend whatever and eventually and eventually this miraculous growth is going to appear…who’s going to get real in this country about the challenge of getting debt down and controlling our spending?
“Andy is portraying himself as a person that is up for genuine leadership and change. But now it is decision time.”