Boris Johnson Calls For Tax Cuts On Capital Gains
Boris Johnson, a State Secretary in the United Kingdom, has called for a Trump-style tax cuts on income taxes and capital gains. He followed the promise that Trump made on his campaign to cut taxes by $1.5 trillion as a way to add fuel to the economy and stock markets.
It looks like Trump’s plans may have worked so far, at least in what contributes to the rise of cryptocurrencies, as these assets had one of their best years soon after the tax cuts have been made.
Johnson has affirmed that the United States has a great economic growth right now with rates above 4.5 percent and a record low unemployment. According to him, part of the reason is that the US government has decided to cut taxes and regulation.
He believes that the effect of cutting taxes is even psychological: governments cut taxes and then people feel more liberated and energized. He has also affirmed that he is “not sure” whether this freedom can be felt in the United Kingdom or not.
“One Trick Pony” And Criticism
The former British Foreign Secretary is currently putting up a fight with Theresa May’s Brexit plans and has been criticized lately for being a one trick pony. Part of the reason is that the British economy has been growing on a very slow rate when compared to other G7 countries.
However, government debt has been decreasing in the country lately, unlike in the United States. Johnson has talked about the great scholar Ibn Khaldun, which lived in Tunisia in the 14th century. According to this scholar, if you cut the right taxes, you can actually increase the receipts of the government. For Johnson, the taxes to cut would be income taxes, capital gains and stamp duty.
“Energizing” The People
Johnson’s plan is to decrease taxes to “energize” the people. He wants to encourage highly skilled immigration and limit low skilled immigration at the same time that he wants to cut taxes. Basically, he is trying to imitate Trump in this regard.
How will this affect the crypto market? It is still too early to affirm anything with 100% certainty, but it looks like Johnson might benefit the holders of cryptocurrencies by lowering capital tax rates and even lowering tax rates may prove to be a good idea.
More important than taxes, however, is how the government will approach cryptos and how it will be able to regulate the market. David Cameron was responsible for subtly starting to give Britain a leadership role as far as regulations in the fintech market are concerned and turned into London into one of the financial capitals of the world again.
In a contrast with his disposition, Theresa May has not quite accepted this position and has, for instance, being against ICOs as a valid way of gathering capital. This has made Britain get away from the center of the fintech world once again and might influence the market more than just cutting taxes.
Will Johnson Bring Optimism Back To Great Britain?
An important question remains: will Johnson actually be able to bring the optimism back? If he is actually able to get the leadership, maybe. If he is able to give Cameron a place in his government, maybe even more. The main issue is not necessarily whether or not to cut the taxes, as they might not have a lot of effect in the industry, but to let the fintech industry grow.
It is hard to predict the exact future of what may happen, but we have to follow the events and and see how Johnson will fare against some opponents like Corbyn and other conservatives that want a place in the top.