Banking News Anger Over Darling's Capital Gains Tax Reforms Continues 1247
Anger over Darling’s capital gains tax reforms continues
13 March 2008 / by Joy Tibbs
However, unpopular capital gains tax(CGT) reforms, which had already largely been unveiled in Alistair Darling’s pre-budget report, provoked hostility from political leaders and industry groups alike.
According to the Chancellor, the new budget “continues a programme of tax simplification” and is designed to “help small companies simplify their tax calculations”.
However, director-general of the Confederation of British Industry (CBI), Richard Lambert, appears unconvinced. “107 new technical tax proposals don’t support the Chancellor’s claims to be moving towards a simpler tax system,” he points out.
Mr Darling explained that there will be a £60 million increase in funds available through the Small Firms Loan Guarantee scheme, and that the scheme will be extended to include medium-sized firms next month.
The response to this was positive from the British Bankers’ Association (BBA). “We welcome measures announced in the Chancellors’ Budget today to help new and growing businesses develop,” it says in a statement.
“Changes to the small firms’ loan guarantee scheme, as well as extensions to other business measures, will make it simpler, quicker and easier for firms to get credit and for banks to have a safety net when lending in that vital but volatile start-up time.”
There was also support for the Government’s decision to lower corporation tax from 30 per cent to 28 per cent; “the lowest corporation tax rate in the G7”, according to Mr Darling.
The BBA said: “We are pleased the Chancellor recognises the need for a competitive corporation tax regime to keep the UK at the forefront of global business and welcome any cuts to keep the UK’s tax burden low.”
However, opposition leader, David Cameron, was not so easily impressed. “Corporation tax on small businesses,” he comments. “Up by £800 million as we head for a downturn. It’s a crazy way to respond to a slowdown. Hitting the very people that create the wealth, jobs and investment this country so badly needs.”
And there was further controversy over the Chancellor’s new CGT rules, which he claimed in the budget would facilitate “one of the lowest rates in the world”, under which “90 per cent will continue to pay capital gains tax at 10 per cent”.
Liberal Democrat leader, Nick Clegg, expressed disbelief. “It is frankly amazing that the Chancellor has contrived to create a tax change that has caused howls of anguish from businesses and cries of derision from commentators but still allows hedge fund managers to pay lower rates of tax than their cleaners,” he says.
Marketing director at Norwich Union Life, David Barral, added his criticism. “It’s hugely disappointing that the Chancellor has ignored the concerns and views of the industry and has instead chosen not to redress the imbalance of taxation of investments brought about by his changes to CGT,” he comments.
Despite this, the CBI – which has previously been very vocal and condemnatory about the CGT changes – appears to be softening. “Although the anger over capital gains tax is still simmering, entrepreneurs and smaller businesses will recognise that the Government has made an attempt to listen,” concludes Mr Lambert.
© Fair Investment Company Ltd