Capital gains tax 'ill-conceived'

Measures announced to reform capital gains tax were "ill-conceived" and would not do much to ensure affordability, according to Alternattiva Demokratika.

AD chairman Harry Vassallo said the government is still locked in the mind-set that property and property development are crucial to the economy because of the speculative nature of the market.

The government should have worked towards a reform to lower taxation on labour rather than capital.

"The government is sending wrong messages to the market that the key to an economic revival lies in the property market," Dr Vassallo said.

AD spokesman on finance Edward Fenech said the government had once again made a distinction between inherited property and acquired property.

Mr Fenech claimed that the reform could lead to property hoarding since properties purchased in recent years are to be subjected to a high rate of tax and therefore owners may hold on to them for longer periods to ensure that they can recover the 12 per cent "sales tax" on property.