Proposed austerity measures in the U.K. involve tax hikes or the removal proposed tax breaks, across a wide range of issues.
For stocks, most worrying is the capital gains tax hike being discussed:
The document confirmed that it would push ahead with plans to increase sharply capital gains tax on the sale of second homes, shares and buy-to-let properties.
The plans, which could see the tax more than double from 18 per cent to 40 or even 50 per cent, will be set out in detail in next month’s Budget.
50%? That would tank the valuations of all U.K. shares, at least for local investors. Driving, flying, and even marriage will be taxed, or not given planned relief, in order to help plug the budget deficit.
The coalition agreement also pledged to increase the proportion of tax raised from green levies.
Conservative plans to cut fuel duty when oil prices are high have been abandoned, leading to fears that motorists will be targeted.
More money is expected to be raised by changing the way flights are taxed, which could add more than £300 to the cost of a long-haul family holiday.
The Liberal Democrats refused to support Conservative plans to offer new tax breaks to married couples. Although the Lib Dems agreed not to vote against the plans, the Prime Minister may face a struggle to introduce the necessary legislation.
The U.K. needs to address its fiscal problem, but it seems some of these measures could put economic activity into a coma. Especially the disincentive towards investment and travel.