Emergency Budget: Capital Gains Tax to rise

JamesU

uk1 wrote: »

Just a further update. I've just received a note from an MP very prominent in the argument. He feels he has done all he can and that as the measure will be supported by the labour party that it will pass into law.

I guess that apart from moot discussions it is probably the end of the issue.

As previously, I am fairly unclear on how politicians change policies and legislate, and still have one niggling question at the back of mind. As far as I understood, the ConDem coalition was formed to ensure that there was a sufficient majority to make changes. If so, why is the backing of Labour required to legislate the budgetary changes? I am probably missing basic principles or procedures here, can somebody elaborate a little on this?

JamesU

uk1

JamesU wrote: »

As previously, I am fairly unclear on how politicians change policies and legislate, and still have one niggling question at the back of mind. As far as I understood, the ConDem coalition was formed to ensure that there was a sufficient majority to make changes. If so, why is the backing of Labour required to legislate the budgetary changes? I am probably missing basic principles or procedures here, can somebody elaborate a little on this?

JamesU

Hi there again.

Loads of reasons. For example let me walk through one scenario. . A main game that oppostions play is to orchestrate Catch 22 situations where whatever governments do they cannot win. So where there is disharmony they will often support to excaberbate the disharmony. This is a "slowly, slowly catchee monkey" game and has lots of benefits. They are also seen to be seen to "put aside party differences" for a bit of legilsation that makes them look good because they are assisitng the government with it's "mandate". It's also good for them because they would have loved to tax nasty second home owners anyway but would never have done it in power. And at the same time they get the extra whammy of doing everything to undermine the arrangement / coalition which will hasten it's demise. They do that in this way.

Imagine you were a member of a group of very livid and discontented Conservative backbenchers and you hate the cgt detail. If you know in advance that if you make a stand and orchestrate a revolt, that your stand would be undermined by the oppostion because they will support it and force it through then what would be the point? In the end it's making the points of weakness bigger and more emotive that will cause the coalition to buckle nd eventually break. Bear in mind that both coalition parties must be very careful over "whipping" because each party's MP's could argue that in conscience they cannot support parts of the legislative programme because the government didn't win the programme through public mandate. If they start heavy-handed whipping - it's the start of the end of the coalition. Marginal coalition MP's might actually improve their safety by being seen as rebellious over what is going to be some unpopular laws.

So the Labour party "look good", get a bit of legislation through that hits the "wealthy" middle classes, and causes mischief to the coalition.

What's to lose exctly!

Makes sense? Does thast answer you're question - if not ask again and I'll try again.

John_Pierpoint

No wonder the Venetians gave up on "democracy" once they discovered its evils.

JamesU

uk1 wrote: »

Hi there again.
Makes sense? Does thast answer you're question - if not ask again and I'll try again.

Thanks for this, understood.

So labour are involved in the vote on legislating budgetary changes anyway (my premis: even with a ConDem majority they cannot legislate for this alone because Labour MPs are also entitled to vote) and hence both Conservative and LibDem MPs have less power to argue policy anyway?

If what I have said above is correct it's a no win situation as far as I can see, and difficult to envisage how policy can be implimented rationally under these circumstances. Guess this is inevitable with a coalition government.

And do you happen to know who actually was responsible for the finer details? In particular (i) deciding CGT should not be index linked, and mandating the calculations leading to 18%/28% switch at the interface of low and higher rate tax payers and (ii) changing the linking of various benefits, pensions etc to CPI rather than RPI?

JamesU

uk1

JamesU wrote: »

Thanks for this, understood.

So labour are involved in the vote on legislating budgetary changes anyway (my premis: even with a ConDem majority they cannot legislate for this alone because Labour MPs are also entitled to vote) and hence both Conservative and LibDem MPs have less power to argue policy anyway?

If what I have said above is correct it's a no win situation as far as I can see, and difficult to envisage how policy can be implimented rationally under these circumstances. Guess this is inevitable with a coalition government.

And do you happen to know who actually was responsible for the finer details? In particular (i) deciding CGT should not be index linked, and mandating the calculations leading to 18%/28% switch at the interface of low and higher rate tax payers and (ii) changing the linking of various benefits, pensions etc to CPI rather than RPI?

JamesU

Several questions there ......

Firstly it wouldn't be true to say that any individual arrived at the cgt formula but you have to see it from the perspective of what was happening. People like Cable was deeply concerned about the cgt compromises - as was many others - and there was a real threat that either the coalition wouldn't get off the ground or would crash land before the end of the runway. If Cable had left it would have started a domino effect in those early days. So cgt was one of the casualties.

In terms of the wider point, the key issue that still addresses the question of real democracy is that we have a system whereby we vote for an individual to represent us. We do not have any say over who leads the country. We should be choosing people who we trust to follow their own consciences and to always do what they consider to be the right thing. They are not called "honourable" for nothing. It use to make my blood boil every time I heard Blair state that he had a mandate for his policies. No member of the general public voted for Blair to be Prime Minister and he's personal presidential policies were without any semblance of democratric support. Even worst so for Brown. But back to the point. The problem is that MPs however belong to a party, and in the end it is their party that tells them how to vote and not those that put them there. Regrettably therefore they will often do things that is at variance to what they would do if they were not whipped. It has always been my belief that what would improve democaracy out of recognition is making whipping illegal and making MPs' membership to a party looser. They should swear an oaf (that they keep) to do what is right in their own conscience and place party loyalty completely secondary.

JamesU

uk1 wrote: »

Several questions there ......

Firstly it wouldn't be true to say that any individual arrived at the cgt formula but you have to see it from the perspective of what was happening. People like Cable was deeply concerned about the CGT compromises - as was many others - and there was a real threat that either the coalition wouldn't get off the ground or would crash land before the end of the runway. If Cable had left it would have started a domino effect in those early days. So cgt was one of the casualties.

Well, as in questions (i) and (ii) I would still like to know who exactly was responsible for these changes and on what basis. The cgt formula, lack of indexing and changes from RPI to CPI did not just majically appear out of thin air. I feel the impact on individuals previous and future planning, and the impact on retired people who have planned prudently, is just too significant to ignore and I really would like clarification on this from somewhere. Guess querying this with the local MP in the first instance is the only answer.

uk1 wrote: »

In terms of the wider point, the key issue that still addresses the question of real democracy is that we have a system whereby we vote for an individual to represent us. We do not have any say over who leads the country. We should be choosing people who we trust to follow their own consciences and to always do what they consider to be the right thing. They are not called "honourable" for nothing. It use to make my blood boil every time I heard Blair state that he had a mandate for his policies. No member of the general public voted for Blair to be Prime Minister and he's personal presidential policies were without any semblance of democratric support. Even worst so for Brown. But back to the point.

Agree with all of this personally....but it is a circular argument which is easily disputed based on legal procedures and party protocols... when people vote for a party although it is "taken as read" by voters such as myself that you are also voting for the leader of that party aswell, this is actually incorrect. Example in point: anybody who voted for labour and Tony Blair may have not felt the same way if they knew they would end up with Gordon Brown. But the party can change their leader irrespective of public opinion, and that is exactly what happened and can happen.

uk1 wrote: »

The problem is that MPs however belong to a party, and in the end it is their party that tells them how to vote and not those that put them there. Regrettably therefore they will often do things that is at variance to what they would do if they were not whipped. It has always been my belief that what would improve democaracy out of recognition is making whipping illegal and making MPs' membership to a party looser. They should swear an oaf (that they keep) to do what is right in their own conscience and place party loyalty completely secondary.

Would be ideal technically, but even assuming MPs were able to put party loyalty secondary, I think there would always be other reasons why this would not work in practice. Firstly, self preservation to remain an MP might be a higher priority than taking uneasy decisions that could put their position in jeapordy. Secondly, there would have to be an implicit assumption here that all MPs act in public interest rather than self interest which is evidently not the case in many instances. And even if MPs think they are doing the right thing according to their own self-belief this does not mean their individual judgement is actually correct, it can be delusional. Typical examples may be a party leader that believes a mandate exists and taking a course of action that may well be contrary to majority conscensus, MPs self-belief on e.g. expenses, and continuing to argue the point with a clear conscience even when the general balanced consensus is that this is unacceptable. Moreover, I think maybe these are also just general sociological traits and issues to consider rather than trying to damn all politicians. Because in principle this happens in all walks of life e.g. those with executive and/or financial power over other individuals. So I see no way forward in any of this, hence my previous simplistic comment of "vote in and vote out" as the other issues are probably insurmountable.

However, this does not mean voters should not make an effort to hold their government accountable. If a government strategy is implimented and considered flawed, it is perfectly reasonable to question the objective basis and justification for this decision. I reserve my judgment on the impact of changes from RPI to CPI until I have had time to assess this properly over the last 20-30 year period and, in any case, this analysis is less relevant on this thread. But personally I find it difficult to accept the smokescreen argument for decision making on CGT budgetary changes based on political compromise rather than sound financial judgement when the end result is fundamentally flawed and the implications on individuals are so important. Hence within the context of this thread, my focus on the quesitons in (i) and (ii).

JamesU

uk1

I was merely attempting to explain my view of what actually happens rather than what I'd like to happen and I was in no way defending anything as I have no need to!

The right person to seek proper recourse and if you want to pursue your questions is your MP although I must admit I'm not clear how it helps knowing exactly what the decision making process was and who precisely made it.

For what it's worth I'm still seeing MP's explain this by copying and pasting Hansard which merely repeats that basic rate tax payers will "continue to pay cgt at 18%" - so I don't know whether they genuinely don't "get it" or they are being evasive.

Anyway ... nice to talk to you. I'm off for some curry making ....

JamesU

uk1 wrote: »

I was merely attempting to explain my view of what actually happens rather than what I'd like to happen and I was in no way defending anything as I have no need to!

Yes of course, understood. And I really appreciate your views on this. As I have said previously because I am worlds away from understanding the sociology and politics surrounding this issue, your input has helped a lot in this respect.

uk1 wrote: »

The right person to seek proper recourse and if you want to pursue your questions is your MP although I must admit I'm not clear how it helps knowing exactly what the decision making process was and who precisely made it.

Quite simple. I would like to know which political affiliation and which people were instrumental in producing a sub-optimal and flawed strategy, rather than seeing it left as it is at present, shrouded in mystery. It is then also easier to know where to field questions on the reasoning, merit and justification for the changes that were decided, whether these are requested personally or publically.

uk1 wrote: »

For what it's worth I'm still seeing MP's explain this by copying and pasting Hansard which merely repeats that basic rate tax payers will "continue to pay cgt at 18%" - so I don't know whether they genuinely don't "get it" or they are being evasive.

Yes, me too and it is very disturbing. The penny has not dropped, the soundbites and deception stand everywhere. I saw Hansard discussing the same simplisitic and deceptive rhetoric to members of the Welsh assembly on TV recently without anybody picking up on any of this at all. Everywhere you read about this, it is the same deceptive message. Their needs to be substantial public awareness on the real implications. Identifying the people responsible for this in the first place, and also establishing whether or not they just "do not get it" or are being evasive is very important to ascertain. The public, myself included have a right to know and it is just a question on how to extract this information most easily in the first instance.

Enjoy your curry!

JamesU

Hotscot

Recent postings by uk1 & JamesU suggest that the unfairness of the new CGT regime still hasn't penetrated the understanding of most folk. However, an article in today's Sunday Times (Money Section) suggests the message might be starting to get through, especially to those nearing retirement & the already retired with second homes abroad.

But moving abroad & living in one's second home for five years (to avoid all CGT) does not help readily those who own second homes only in the UK. For both family and economic reasons, we should be pleased to see our citizens remain UK based. We should not be creating an unbalanced, discriminatory & penal tax regime that looks likely to drive many away.

As we keep saying, this one has some way to run before it is (hopefully) fixed.:(