Liberal Democrat Shadow Chancellor Vince Cable has hit out at the Government for continuing to allow tax avoidance through capital gains tax loopholes.
Speaking in Parliament on Wednesday in response to the pre-Budget report, Cable slammed Darling’s speech, citing it as “a good Budget for bingo and boilers”. He criticised Darling for not changing CGT rules, which he said allowed a tax avoidance loophole which goes against the Chancellor’s pledge for tax fairness.
He said: “Darling has given a gift-wrapped invitation to tax avoidance by keeping capital gains tax at 18 per cent. He had an opportunity to deal with that today and he has done absolutely nothing about it. Unless there is fairness, the public will not accept that for the next five years or longer there is going to be a real hard slog for this economy.”
He also questioned Darling’s assumptions for GDP growth – the Chancellor’s report says that gross domestic product will grow 3.5 per cent by 2011.
Cable said: “What is the basis for this assumption? It is a little like the story of the economist who was given a tin of food to eat and says, let’s assume the existence of a tin opener. Surely we cannot operate on a single-line forecast based entirely on optimism and very little else?”
Cable also hit out at the UK’s over-reliance on the financial services sector. He said: “For the last decade, the Government has been over-dependent for its revenues on the fickle fortunes of the banking industry, assuming house prices would rise forever and on consumer borrowing.”
Darling rejected Cable’s criticisms, saying: “The financial services industry has been a major part of our economy and I believe it will remain so. It employs over a million people in this country and, when properly regulated and supervised it is important.”