IS THE ABOLITION OF CAPITAL GAINS TAX JUSTIFIED?

Ashok Parikh*

Pakistan Journal of Applied Economics, 1987, vol. 6, issue 2, 103-124

Abstract: The paper evaluates the government’s decision to abolish capital gains tax and substitute it by an increase in stamp duty rates on urban immovable properties. The analysis does not support the case made for the abolition of the tax. It shows that the two percentage point increase in stamp duties recommended is inadequate to. maintain the existing level of revenue. Moreover, the new scheme introduced is regressive in incidence and leads to a ‘lock-in’ of capital. A ‘reverse merger’ of the two taxes is instead recommended in this paper.

Date: 1987
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