Both David Cameron and Alistair Darling spoke about capital gains tax (CGT) at the Confederation of British Industry (CBI) annual conference in London on Tuesday. While the Conservative leader sought to question the changes and gain the trust of the business sector, the Chancellor defended his controversial tax reforms announced in the October pre-budget report.
Mr Cameron argued that the Government's abolition of taper relief and introduction of a single 18 per cent rate would hamper the progress of UK firms. "Business faces huge pressures today, and Government's role should be to make it easier, not harder, to do business," he said.
"The best thing he [Alistair Darling] could do is stand up, admit he's made a mistake and abandon his ill-conceived plans," he added. Mr Cameron warned the Chancellor against making "sticking plaster changes to proposals", calling for real changes. He also questioned whether the reforms actually amounted to a simplification of the CGT system and cast doubt over the future of the UK's entrepreneurial sprit should they be implemented.
"If the Chancellor fails to abandon or radically alter his approach we will fight his tax hike on Britain's entrepreneurs every step of the way, both inside and outside Parliament," he told conference attendees.
Mr Darling responded by saying that he was listening to concerns from businesses and would report to Parliament shortly. He also said it was "right and fair that they [businesses] pay their share in tax as a contribution to the economy's future strength."
Furthermore, he suggested that the new rate was globally competitive and that the Government was actually rewarding investment by taxing gains at a lower rate than income. "It is also right to make the system more straightforward and sustainable, with a tax that is easier to comply with," he said.
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