A group of British “patriotic millionaires” has urged the government to increase capital gains tax as they say this would not damage investment and entrepreneurship.
Patriotic Millionaires UK, a campaign group of rich self-made entrepreneurs calling for higher taxes on the rich, have contributed to a report by the Institute for Public Policy Research (IPPR) that is urging Rachel Reeves to increase CGT (top rate of 28%) to the same rate as income tax (top band is 45%).
The IPPR said if the government did so it would raise around £14 billion a year, noting that CGT is only paid by around 0.65% of the adult population, or around 350,000 people, with most of the revenue derived from CGT coming from the 0.02% of the population who make gains of over £1 million.
"The recent fear-mongering from some that increasing capital gains tax will take the economy back to the stone ages is pure hyperbole," said Pranesh Narayanan, research fellow at IPPR.
The Patriotic Millionaires UK group includes Mark Campbell, co-founder of piemaker Higgidy (pictured), who said the UK "needs a fairer tax system to invest in its future".
People, like himself and other millionaire entrepreneurs, who have "benefited the most", Campbell said, "should contribute more so that we have a healthy society and economy for future entrepreneurs to operate within".
Julia Davies, millionaire lawyer and impact investor, said tax decisions do not dictate her investment decisions and that increasing capital gains tax "won’t stop anyone serious about growing their business or supporting the next generation of entrepreneurs".
Rather than a "marginal change" in tax as the government might choose to do, Davies said what was much more important was the opportunity for the Budget to raise more funds and therefore create "the opportunity for growth [via] well funded public infrastructure and services".
Various newspaper reports this year have suggested that raising capital gains tax would discourage entrepreneurship, but this is "simply a myth", said Photobox co-founder Graham Hobson.
He said CGT rates were equal to income tax when he set up his company and so "didn’t stop me from starting and growing a successful business".