Private equity veteran Jon Moulton has hit out at the Treasury’s proposed plans for the largest tax hikes in a generation, arguing that the threatened rises could damage the City of London.
Mr Moulton, the former Tory party donor and Brexit backer who founded turnaround fund Better Capital, said a high tax regime would disfavour the UK as a base for “financial souls” with skills in demand abroad. He added rival finance hubs such as New York and Singapore would “love it” as they could benefit from higher taxes in London.
The City veteran said the threatened increase on capital gains tax was “really not good news” as it could “favour entrepreneurs starting up outside the UK” and would “do nothing” for morale for those based here.
Mr Moulton, 69, has pushed back against the possible tax grab following a difficult year for his Guernsey-based private equity business.
He has had to de-list two Better Capital funds from the stock market after coronavirus sent two companies owned by one of them crashing during lockdown, years after his business lost £20m on the collapse of parcel delivery firm City Link over Christmas 2014.
His call for the Government to ditch the mooted tax hikes in the autumn Budget followed a week in which business leaders, Conservative backbench MPs and senior economists fought back on the proposals.
It followed reports that the Chancellor was considering putting up levies such as corporation tax, capital gains tax, fuel duty, online sales tax, inheritance tax, and cutting pension tax relief.
Rishi Sunak confronted the issue last week, warning MPs to expect tax rises as he said it was now time to be “honest” with the public about how the cost of the coronavirus response would be met. He said that while there would not be “a horror show of tax rises with no end in sight”, it was not possible to “simply borrow our way out of any hole”.
He added: “If we argue instead that there is no limit to what we can spend, that we can simply borrow our way out of any hole, then what is the difference between us and the Labour Party?”
UK growth crashed 20.4pc during the lockdown between April and June, and there has been an estimated £300bn hit to public finances as a result of the pandemic.