QT and CGT

Acronym day today. First, QT - there's a huge row about the fact that the coalition government refused to put a cabinet member on to the show if Alistair Campbell was appearing.

To me, this looks like the Cameroons trying to invent an argument with the BBC. The Lib Dems, perhaps Laws excepted, might be expected to push back a bit, but the Tory party still seems to want to take down the BBC, and probably privatise it. They, of course, being in the pocket of Murdoch.

So here, they think, is a good opportunity. Labour haven't put a front-bencher forward so the Tories in government throw a pretended fit.

It's assinine, of course. Labour don't have a leader at the moment, so any shadow cabinet position is broadly meaningless; better, instead, to have a Labour heavyweight. And Campbell is about as tightly associated with the Brown and Blair years as anyone except Mandelson. Why on earth would you pretend that this is a serious matter if you're Cameron High Command?

Only if you deliberately want to pick a fight. And it ends up with the government just looking a bit stupid, really. It looks like they're telling the BBC who they can and can't have on their programs. It is, effectively, direct government interference in broadcasting (there's an Alistair Campbell related irony here, too, of course). It is also spectacularly petty - particularly in the weeks when the government is popular, and has just had a queen's speech out which has broadly popular support. Now is the time to bask. The time to hide from the media is months or years away yet, but it will surely come.

The other acronym of the day is CGT. There's a huge amount of froth, from the right wing press - particularly the Telegraph - and from the right of the Tory party, about how evil the proposed changes to CGT are. Apparently, this is going to hit the middle classes. That is right. All those median income earners who have huge share portfolios and who have lots of extra properties.

Which means, of course, only the "middle class" in the definitions of people who are very, very rich. Nothing like the genuine middle classes.

Don't listen to their wailing.

In addition, apparently having CGT at the same levels of income tax will discourage people from being entrepreneurial. Does this mean that income tax discourages people from working? I'm sure, to a small degree, it does. And you know what? Tough. The state needs to raise cash to pay for stuff, and to pay down debt. Some of it comes from income tax. There's absolutely no reason that income you get on a second home appreciating in value through you doing nothing should be taxed at a lower rate to income you get from busting your nuts off working hard.

If anything, it should be taxed higher because the person making the money has done so little to earn it.

Obviously, the government should not be making value judgements on how people earn. So, instead, it should make the value judgement on how much people earn. And whether your income is from renting out your property portfolio, selling your property portfolio, selling shares, income from dividends, or actually, normal, salaries, it should basically be at the same rate. There's no good reason for it not to be.

If the government does want to offer a taper relief, it should exist at the value of inflation only - your house can appreciate by CPI or RPI, and you won't get taxed on those earnings, as they aren't real earnings, they just maintain value. But any other capital increase in the value should be taxed.

Incidentally, share dividends are a slightly different matter in how they should be taxed, because the earned income of the company is already taxed as corporation tax; and therefore that amount should be discounted before "income" (in the broad sense, including CGT) tax is applied.

I hope Cameron doesn't buckle to the laffer curve bollocks of John Redwood and goes with his and David Laws's instincts to raise CGT. It makes things not only fairer - removing a tax loophole for the rich that the poor are wealthy enough to use - but it raises cash to help fill the deficit hole we're in.

Thinking of the deficit hole; I just had a look at last year's treasury report. One thing that the Labour government must be massively commended on is increasing the length of repayment of government yields. The average maturity time has increased consistently during the full length of the last decade or more, and that insulates and protects the country far better against short term debt/deficit issues and against interest rate variations. It's not the kind of thing often talked about but it means we're in a far stronger position than almost any other country with a similar debt and deficit profile.