Introduction

As 2020 drew to a close, the possibility of a significant expansion of capital gains taxation seemed imminent. The clues were there. In July, after the impact of the pandemic had fundamentally changed daily life, Rishi Sunak, the Chancellor of the Exchequer, requested a review of the tax from the Office of Tax Simplification (OTS, 2020), which is an independent governmental advisory body that has the purpose of advising the Chancellor on ways of simplifying taxation. The report was released in early-mid November, and contained recommendations to increase rates of taxation, and to reconsider certain reliefs. A week later, the Chancellor released a Spending Review, which was, he assured, focused on increasing (and not decreasing) spending (Sunak, 2020). Thus, he enhanced investment in the NHS, and protected it (for the moment) from further cuts. Considering these moments in history together, it is fair to deduce that the Chancellor will need to find the money to pay for a significant increase in spending. Capital gains taxation, given the attention it had received since July 2020, seemed the obvious target.

It is also a moving target, and it is challenging to pin down the exact moment in time that could be designated as safe to pause, and to reflect on the way ahead for taxation in the aftermath of the pandemic. One lesson from recent, trying times is that nothing should be taken for granted. Even more unanticipated events might occur which would prompt the Chancellor to consider trying something else. The risk of waiting for activity to pause, before reflecting, is that assumptions of what should be taken for granted remain unchallenged. At moments of great difficulty, it is perhaps more important than ever that creative solutions should be considered, even if ultimately discarded. This chapter argues that capital gains taxation provides the perfect forum for consideration of basic principles of fairness in taxation, and this is nowhere more evident than in a brief reconsideration of the history of its introduction. A reminder of that history follows, and is then compared with an area of government action (spending) which, during the era of austerity, seemed to operate on a set of very different principles. There is no reason why the principles that underpin taxation, and spending, cannot be considered together.