Business groups have welcomed the Treasury Select Committee’s criticism of the lack of consultation offered to companies over the Capital Gains Tax (CGT) reforms.
The government was reprimanded by the Committee for its failure to adequately consult with businesses before announcing the abolition of Taper Relief and introduction of a flat rate of 18% for CGT.
The Committee also called for Darling to set out how it proposes to ease the effects of CGT reforms, in particular the effect of the withdrawal of taper relief for small firms.
The Federation of Small Businesses (FSB) believes the changes will damage the UK’s entrepreneurial competitiveness and hit small businesses hard.
John Wright, FSB national chairman said:
“The Treasury Select Committee has today confirmed what everybody already knew: that the proposed changes to CGT were ill-thought through, ruinous for small businesses and damaging to the UK economy.
“The chancellor must now clarify the process for consultation that he should have carried out before the Pre-Budget Report.
“Small business owners, particularly those considering selling their businesses to pay for their retirement, need to know where they stand so they can plan ahead.”
However, unions have urged for the government to resist calls for cuts in business taxes. Brendan Barber, TUC general secretary said:
“The government should stand firm against the relentless business campaign for cuts in business tax, and should instead get tough with the super-rich who fail to pay their fair share.
“If there are to be any changes in business tax to help smaller businesses then the chancellor should make sure that they are paid for by effectively taxing private equity and the big companies who do not pay their fair share.”
© Crimson Business Ltd. 2007
