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Spectator Money

Could Michael Gove be the one to fix Britain’s tax problems?

29 January 2018

6:05 PM

29 January 2018

6:05 PM

Sir: 

Sir James Dyson is right (Letters, 20 January). We need big farming; that is where our food comes from. But the elephant in the room is tax — inheritance tax and roll-over relief — which of course he conveniently skirts. Farming at this level needs subsidy precisely because land is too expensive for food production to give an economic return through income. And why is this? Because so much money chases land for tax reasons. 

The massive distortion of the allocation of capital due to tax reliefs is one of the fundamental problems of the UK. The solution is not more tax, it is to reduce tax to a level so that the economic case , not tax, drives decisions; and then remove reliefs. Inheritance tax and long-term gains tax at 15 per cent would do the trick nicely and probably raise no less tax. 

The problem with both removing relief while keeping tax at its full rate, and radical reform, would be the capital hit on property assets. At some stage, though, we do have to tackle this, but it requires someone with courage. Might that be Michael Gove?

Charles Pugh
London SW10


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