Jamie Murray Wells: Raising Capital Gains Tax would punish those investing sensibly for their future

Jamie Murray Wells is founder and Executive Chairman of Glasses Direct, the world’s largest online retailer of prescription glasses.

When Capital Gains Tax is low (or better absent), higher-risk investments in young, growing companies may have an attractive risk-profile and investments may be profitable. Complicated calculations about whether they will be worth it after tax are avoided. Capital allocation is dynamic and efficient: small, growing companies raise capital easily in the stockmarket and investors hope to make a good return on their risk money.

The market is working, and incentivised towards, general prosperity. Tax reduces private investment which is the sole producer of wealth.

Conversely, when CGT is high, the market is seriously distorted. Ordinary stock market investors are incentivised away from risk. Already I find myself considering altering my buying/selling strategy in small holdings I own to suit the tax regime rather than those growing companies needs – which cannot be a good thing.

Investors like me re-allocate capital to safe, lower-return, 'hold for ever if I can' companies because they want to avoid or limit crystallising a gain (in some cases forever) which will be subject to high taxation. Investment subjects become plodders beyond their sell-by date. Capital once directed to worthy, undervalued companies remains there when they no longer need it, while it is denied companies more deserving and which offer a much better return before tax. The economic structure of the country suffers. Equally, money that may be re-cycled into private companies like mine, never quite makes it because it remains stagnant in the markets.

Jamie Murray Wells is founder and Executive Chairman of Glasses Direct, the world’s largest online retailer of prescription glasses.

Jamie Murray Wells: The next Conservative government must follow the examples of Reagan and Thatcher and lessen the burdens on entrepreneurs

Jamie Murray Wells is founder and Executive Chairman of Glasses Direct, the world’s largest online retailer of prescription glasses.

A rich entrepreneurial spirit flows through Britain. Thousands of new businesses are successfully established here each year. But the response this Government is proposing to our current economic mess will certainly not benefit the entrepreneurs of tomorrow.

Entrepreneurs are job creators and a fiscal environment that supports entrepreneurial activity is good for the whole UK economy, but the tax rises Gordon Brown says he needs to fund the stimulus and fend off rising unemployment, will in fact do the opposite. And while Brown has been increasing the public sector workforce at the expense of private sector jobs, Mandelson has been renewing the old Labour habit of using taxpayers' money to “pick winners“. The historical record of that policy is disastrous.

In this environment, a Prime Minister needs a firm set of principles and the conviction to stand by them.  What entrepreneurs saw at the Conservative Party conference earlier this month was a bold party leader who is prepared to apply an actual political philosophy rather than just execute an administration.

I was pleased to see the two largest impediments to start-up businesses, excessive regulation and taxation, being tackled head on. George Osborne’s corporation tax cuts and National Insurance holidays and Ken Clarke’s timebombs on the most despised regulation and sunset clauses on quangos were the cool-aid we’ve all been waiting for, and, we hope, indicative of a government with long term conviction for more of the same.

But we must not forget that only 18 months ago the Conservative team, talking about ‘sharing the proceeds of growth’ sounded like they were in favour of increasing the size of the state and public spending. The economic meltdown may have given our party the oxygen of a public appetite for frugality in spending and a smaller government; but business remains to be convinced as to whether this opportunism will morph back to an era of ‘gesture’ politics, or whether the conference heralded the beginning a costed and realistic long-term proposal for tax cuts to reverse the fortunes of this country’s economy, stimulate enterprise and create jobs.