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ABOLISHING TAPER RELIEF PROS & CONS |
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> The pros and cons of abolishing taper relief |
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Pros
• It would close a tax loophole which allows large Private Equity companies to make a large profit whilst paying very low rates of tax
• This could signal a move towards a flat rate tax system, which would be a simpler method of taxation
• With high paying professions paying up to 40% on income tax, an increase in taxation on businesses may be understandable
Cons
• Entrepreneurs contribute greatly to the UK economy and job market, and the abolition of taper relief will discourage the start up of new businesses
• Due to globalisation, the abolition of taper relief may lead existing entrepreneurs to move their operations abroad, taking the economic benefits of their businesses with them
• Investors will be more reluctant to fund UK business, as they will see less of a return on their investment. Innovative and risky new businesses will find it especially difficult to secure funding
• Entrepreneurialism is a high risk profession, and needs high potential rewards to remain viable
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