Support 100 years of independent journalism.

  1. Politics
27 May 2010

How progressive is this government?

The outcome of the CGT row may be an indicator.

By Mehdi Hasan

My column in this week’s magazine explores how “progressive” this new coalition government of “liberal Conservatives” and Liberal Democrats actually is. Progressive is, of course, a notoriously nebulous, woolly and, therefore, contested term.

My argument is that a progressive political philosophy has to be defined, at its core, by its attitude towards the poor and — especially — towards the gap between rich and poor, and the need to reduce that gap.

One of the more progressive measures suggested by the coalition government is the proposal to raise capital gains tax (CGT), currently set at 18 per cent on all gains above £10,100 a year, to a level closer to that of income tax — potentially up to 40 or even 50 per cent.

To tax unearned income is essential to tackling inequalities in income and wealth. It is, therefore, an inherently progressive policy.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

How else do do we know that it’s progressive? Because David Davis and John Redwood are opposed to it.

Content from our partners
The shrinking road to net zero
The tree-planting misconception
Is your business ready for corporate climate reporting?

But will the coalition buckle under pressure from the Thatcherite back benches? Vince Cable, the Business Secretary, has told BBC News that “it’s not actually an argument between the coalition partners, as I understand it, it’s an argument between a few Conservative backbenchers and others”.

He also said:

It’s very important that we have wealth taxed in the same way as income. At present it is quite wrong and it is an open invitation to tax avoidance to have people taxed at 40 per cent or potentially 50 per cent on their income, but only taxed at 18 per cent on capital gains. It leads to large-scale tax avoidance. So, for reasons of fairness and practicality, we have agreed that the capital gains tax system needs to be fundamentally reformed.

He’s right, of course. But whether or not he — and the other Liberal Democrats in this new government — are able to stick to their guns on CGT, and resist the right-wingers, will be a crucial test of the coalition’s progressive credentials.