Ramesh, encouraging and helping people to provide for themselves in retirement seems not only laudable, but prudent, and the resulting increase in the pool of domestic savings ought to bring other economic benefits in its wake. That’s why I think we need to shift more [updated: previously read "some"] of the tax burden away from income (and, even more, savings) onto consumption. To the extent that long-term capital gains are to be taxed at all, it should only be after indexation for inflation. As for the sale of a long-term principal residence, that should simply be tax free (lowering the cap on mortgage interest tax relief might be a way to offset the ‘cost’ of this). It’s worth noting incidentally (and many thanks to the reader who pointed this out to me) that, as matters currently stand, a capital gain on the sale of a personal residence is taxable (albeit with certain exemptions), but a capital loss is not deductible. Odd, that.