LONDON: Britain’s fledgling coalition government took a second blow in three days yesterday when it was revealed the new Chief Secretary to the Treasury avoided paying capital gains tax when he sold his taxpayer-funded second home at a profit.
Danny Alexander, who was appointed at the weekend after the resignation of fellow Liberal Democrat David Laws, designated the property as his second home for the purpose of claiming parliamentary expenses but described it as his main home, reports said. He admitted last night that he used a loophole to legally avoid paying CGT on the sale of the south London property for pound stg. 300,000 in June 2007, The Daily Telegraph reported.
The disclosure comes at a sensitive time because the government is planning to increase the rate of the tax for owners of second homes and buy-to-let properties in an emergency budget next month, the report said.
When Mr Alexander sold his flat, the top rate of CGT was 40 per cent. It has since dropped to 18 per cent but the Lib Dems are pushing for it to be increased to 40 per cent or even 50 per cent, the paper said.
Mr Alexander has become the second Lib Dem to face questions about his finances within three days. This has focused attention on whether the party leadership has properly audited the financial activities of its senior figures, the report said.
The Conservatives thoroughly audited all of their MPs’ claims at the time of the expenses scandal that rocked Britain last year, the paper said. Nick Clegg, the Lib Dem Deputy Prime Minister, has been highly critical of MPs who avoided capital gains tax on the sale of their taxpayer-funded second homes, the report said.
The revelation about Mr Alexander came as Prime Minister David Cameron’s high-wire coalition balancing act was thrown off balance when high-profile finance minister David Laws quit over his expenses claims. Mr Laws stepped down as chief secretary to the Treasury after admitting he had failed to disclose that he had claimed back rent he paid to his boyfriend because he wanted to keep his homosexuality secret.
Mr Laws, a millionaire former banker, had been one of the chief architects of plans to reduce Britain’s gaping budget deficit in his role as deputy to Chancellor of the Exchequer George Osborne.
He resigned after the Telegraph reported he had channelled more than pound stg. 40,000 of taxpayers’ money in rent to his long-term partner, James Lundie, a lobbyist.
Since 2006, British parliamentary rules have banned MPs from “leasing accommodation from a partner”. He said he had not registered the financial arrangement because of “my desire to keep my sexuality secret”.
Mr Alexander played a key role in the negotiations to form a coalition following the indecisive May 6 general election. Mr Cameron has pledged to clean up politics after last year’s expenses scandal, in which lawmakers were shown to have filed expenses claims for everything from porn films to ornamental duck houses.
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