Nicola Plant comments: "Many individuals with property and assets that might be subject to the new higher rate of tax have spent the last 12 months disposing of assets at the lower rate. Capital Gains Tax is something that generally only effects those who are better off and as such, if they've missed the opportunity to sell now, provided they don't need the cash, they can simply hold onto assets until fortunes change. If the need to release capital tied up in assets never arises then those families are more likely to consider giving away the assets to the next generation, which can potentially avoid both Capital Gains Tax and Inheritance Tax. The flurry of activity in the markets recently is likely to slow down again, but won't necessarily be catastrophic enough to cause a wholesale crash.
"If one were looking at the Budget from the perspective of the thrifty post-war housewife, then the measures announced might seem a prudent strategy for balancing the household books. Squeeze as much 'housekeeping' money in the form of taxation from the breadwinner of the family; cut back at the bottom on all non-essentials; where forced to spend, wring out the value from every penny and let nothing go to waste.
"High earners have already seen an increase in the top rate of tax to 50 per cent and changes affecting pension contributions. Bringing capital gains tax back into line with income tax was, therefore, a logical and not unexpected next step.
"Other measures announced are more egalitarian, based on the choices we make about how we spend our money. It remains to be seen what effect duty and VAT increases will have on the likes of retailers and holiday operators. However, if one were looking for a longer term measure of the impact this Budget may have on the economy, this might be a good place to start. If society is feeling the pinch at all levels then were likely to see a rapid contraction in the profits of those sectors. If a slow down does occur then the question is whether the additional tax raised is sufficient to cover the costs of falling back into recession and reduce the structural deficit at the same time.
"The overweight executive, who smokes, drinks, drives a gas guzzler and takes several holidays a year will clearly be the worst hit by this Budget. However, this is a Budget of "make do and mend" in an era of austerity. Whilst many a post-war housewives might take pride in such an approach, the prevailing wind of hope and new beginnings that existed at that time still seem a very long way off for most of us."
