Thursday, 24 January 2008

Consistent inconsistency

2 stories from recent days:

The government's latest plan to save Northern Rock is to convert the £25 billion loan into bonds which will be guaranteed by the government, and then to try to get Northern Rock sold to a private investor.

So, the government (sorry, the taxpayer; as if the government would do that with their own money!) takes all the risk if it fails, gets none of the benefit if it succeeds, and the private investor can't lose.

Second is capital gains tax. As I understand it, if you buy an asset (property etc.), keep it for a while and then sell it for a profit, you pay tax on the profit (the capital gain).

So, the individual or business takes the risk of investing (the asset could appreciate or depreciate), bearing all the downsides of any loss; but woe betide you if you make a profit, you wicked capitalist - the government takes its cut.

Oh well, at least the inconsistency swings both ways!

1 comment:

dave williams said...

In the end it perhaps was the best solution for them in terms of where they ended up.

If that sounds like damning with faint praise it is. Once people like the Bank of England and the Treasury got involved -first destabilising the business -then giving the impression that no-one need worry -"The Government" would look after them. Then we really were in trouble.

And nor is that to say that I think it is a case of sit back and let the market take its course -which no government would do.

Now what about those of us whose pensions were made worthless with a little bit of help from Gordon?