Dear Miliboy: It Ain’t A Tax Cut For Hedge Funds
WE have Ed Miliboy whining about a tax cut for hedge funds:
Ed Miliband, the Labour leader, in September suggested that Labour would reinstate the tax, describing the Coalition move as a “tax cut on hedge funds”.
Hmm, wonder what this could be?
The Treasury has promised to abolish “Schedule 19” stamp duty reserve tax, which applies to some investments sold by funds.
Err, Schedule 19 doesn’t apply to hedge funds. It applies to unit trusts: and no, unit trusts are not hedge funds.
But wait, there’s more!
A tax cut for City fund managers will leave the typical worker £11,000 better off on retirement, the Treasury has said.
If the tax cut will leave pensioners better off then the original tax isn’t on fund managers, is it, it’s on pensioners.
Think it through: the absence of the tax makes pensioners better off. Therefore the presence of the tax must make pensioners worse off. So, who, originally, is paying the tax? The fund managers (or the hedgies) or the pensioners? Correct, it must be the pensioners.
I’m fine with people arguing that people saving with their pensions should pay more tax. I might disagree with the idea but it is at least a reasonable logical argument. But to shout that taxing future pensioners less is a tax cut for hedge funds is simply an out and out lie.
Or, alternatively of course, the Miliboy is simply too dim to understand what he’s talking about. Neither are particularly comforting explanations really.